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Report Latinos want to grasp use financial services
MADISON, Wis. (11/21/07)--Latino families lag behind non-Hispanic white families in the usage of most wealth-enhancing financial instruments, but nonprofits--such as credit unions--can help change this, according to the Filene Research Institute’s latest report. The report, “Financial Services and Product Usage by Latinos in the United States,” indicated that Latinos are similar to white families in their consumption of basic financial services and products, such as primary homes, vehicles and debt instruments. Barbara Robles, associate professor in the College of Public Programs at Arizona State University, is the author. However, Latino families lag behind white families in use of wealth enhancers, such as retirement pensions, nonfinancial equity, and several stock market-linked financial instruments, Robles found. The lag is not attributed to risk aversion, Robles argues, but rather to two factors:
* Income constraints tied to educational outcomes; and * Lack of familiarity with and knowledge of financial markets and, consequently, a lack of understanding and use of financial products tied to financial market movements.
“Clearly the data tell us that Latino families want to understand and use financial services and products,” Robles said in the report. “Financial markets, services and products are often paralyzingly complex and overwhelming for nascent financial service consumers, especially those with limited exposure to financial institutions. “One way to help achieve trust and comfort is to partner with community-based nonprofit organizations that engage in financial education outreach, operate tax preparation sites, and offer International Development Association programs and basic homeownership counseling,” she continued. For low-income Latino neighborhoods, community-based nonprofit organizations that serve and are led by Latinos can have an effective, long-term role in the financial well-being of high-density, low-income neighborhoods, Robles said. “In order to best serve this booming market, basic fundamentals of marketing such as cultural appeal, knowing the educational levels of the consumer niche, and assuming rudimentary financial product understanding--such as teaching the magic of compound interest--become essential components for delivering financial services in high-density Latino communities,” Robles concluded.
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