The Washington Post features a story on the shifting strategy of large brokerage houses to recruit minority investors, particularly from amongst the South Asian an Hispanic communities (where they see the most opportunity):
A handful of well-dressed professionals gathered in a gallery at Christie’s auction house here the other day to listen to a South Asian art expert discuss works soon to go on sale, including several by Maqbool Fida Husain, considered India’s Picasso.
No one in the crowd planned to buy any art. In fact, few even cared about it. They just wanted to sound smart at a cocktail reception later in the evening.
The Christie’s event provides a snapshot of Merrill’s aggressive effort, replicated to varying degrees among Wall Street firms, to harness demographic shifts in American wealth.
The Merrill effort, headed by three-time cancer survivor and former star financial adviser Subha V. Barry, has so far focused on wealthy South-Asian Americans and Latinos in a handful of big cities, including the District…
According to the article the sudden shift in strategy is tied to the fact that as baby boomers retire they will only be withdrawing from their investments. Thus, Merrill is targeting South Asians because, “25 percent of South-Asian Americans earn more than $100,000, far more than the average.”
You have to wonder why Merrill and all these other brokerage firms finally woke up to the fact that South Asians have wealth just waiting to be invested.
“Brokerage houses not paying attention to these new markets are going to slip behind, and it’s going to hurt their earnings,” said Richard X. Bove, banking analyst at Punk, Ziegler & Co.
Barry recognized all this. Her second successful battle with Hodgkin’s disease had inspired a desire to do something different, and in 2001, she chose to junk her brokerage career. She noticed that neighborhoods around her Princeton, N.J., office were changing as upper-middle-class families of Indian, Chinese and Korean descent moved in.
But for years, Barry, who came to the United States from India in 1983, remained the only nonwhite adviser at her branch. “It wasn’t because they were bigoted,” she said of her colleagues. “They just didn’t see any reason to change.”
The article goes on to mention that Merrill has developed a good relationship with a South Asian networking organization (yes, another one) called Tie-DC.
TiE-DC began in 1997 as the Indian CEO High Technology Council, which was a networking organization catering exclusively to CEOs and senior-level executives. Featured in such publications as Forbes Magazine, Business Week and USA Today, the ICEO Council, as it came to be known, has been described in the Washington Post as a “networking nirvana,” with more than 3,000 members (80 percent of whom were non-Indian), including 300 senior officers of publicly traded companies.
Barry expresses well what I think the take-away message from this article is. If any large business does its job right to begin with, they won’t need separate departments to appeal to minority clients:
Finally, Barry expressed her most fervent wish: to shut her unit down. “If we do this right, you won’t need a separate group up on the shelf anymore,” she said. “I want you all to put me out of business in 10 years.”
I dunno. I think they should be hiring more South Asian and South Asian American brokers because they’re overrepresented among the rolls of who’s trained at math and statistics, and so if you don’t have a good sampling of desis that seems like a good indicator that you don’t have a good sampling of strong math skills, and if you want a good sampling of strong math skills, one of many strategies you could employ would be to go after asians. BUT I can’t imagine myself being any more persuaded by a minority broker one way or another. It makes a lot more sense in real estate, which involves more cultural understanding. Yeah, if I’m buying a house, I appreciate a Realtor who innately understands that I just must have adaquate space near the door for shoes. But stocks? That seems kind of weird to me. On the other hand, something I think a lot of young, hip, politically aware people of all stripes—but particularly minorities who are hyperaware of global politics and civil rights issues–would appreciate would be a really top notch, transparent, social-justice/environmental-friendly/science-literate/geopolitically mindful investment house.
Don’t you wear stocks with your shoes? Or are these all stilettos so it doesn’t matter …
Desis have made good “quants” for many years… brainiac Phd number crunchers who make good money but don’t bring in any business and accordingly never REALLY advance. The real bigwigs had always been Jews and WASPS for the most part, mainly because of their connections (networks). I’d imagine the banks are starting to realize that desis have great connections to, which are largely untapped. Its not just in real estate, “who you know” applies in all facets of Business.
I wouldn’t characterize these brokers as solely dealing in the buying and selling stocks. Hopefully they will help their clients cultivate a coherent financial plan for retirement, a child’s college education, or other life goals. An ethnic viewpoint can help the advisors better understand and relate to the needs of the client.