Financial

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By ELIZABETH HAYES

Staff Reporter

More than 12 years ago, Linda Griego sought the advice of a financial planner. It was a major step in her family’s evolution into the business world.

“I was the first person in my family to have a bank account,” said Griego, one of L.A.’s most prominent Latino business owners. “It’s a progression. First the savings, then came the bonds each time a little more then getting into the stock market.”

Griego is among the growing ranks of Latinos who are taking charge of their personal finances by investing in stocks and socking money away for the future.

But it’s been a slow process.

While the Latino population and purchasing power have been increasing, the number of Latinos who invest in stocks, bonds or mutual funds remains relatively low. Only about 2 percent of Latinos nationwide own stocks, compared with 13 percent of non-Latinos, according to a 1997 survey by Yankelovich Partners. The survey also found that 11 percent of Latinos have 401(k) plans, versus 24 percent of non-Latinos.

And just 48 percent of Latinos save for retirement, versus 77 percent of whites, according to a recent survey by the Employee Benefit Research Institute, the American Savings Education Council and Mathew Greenwald & Associates Inc.

But with L.A.’s huge Latino population, investment firms are starting to take notice. Merrill Lynch, for one, launched an extensive program three years ago to reach the Latino, Asian and African-American markets.

“We know from general market research this is a growing, affluent population and the entrepreneurial aspect is growing more,” said Wendell Collins, a Merrill Lynch spokeswoman. “It’s a market that’s relatively untapped and hungry for education. In comparison to the general population, Latinos are under-invested in certain categories.”

Morgan Stanley Dean Witter also has financial advisors who focus on small and medium-sized businesses in Latino areas.

“Our thought is that it will be one of the fastest-growing markets available in Southern California,” said Roc Willis, senior vice president and branch manager of the L.A. office. “Our feeling is, if we have Latinos who are well-qualified financial advisors, they are in a good position to help those people and represent the company in that area.”

A big reason for the low level of investment activity among Latinos is their relatively new wealth.

“They made it themselves. They worked extremely hard and are extremely entrepreneurial. They’re not accustomed to dealing with an individual from Merrill Lynch saying they have an estate-planning issue,” said Joe Cervantes, a senior financial consultant with Merrill Lynch in Los Angeles.

Often, the entrepreneurs Cervantes deals with are either the first in their families to make it or recent immigrants from Latin America who are so busy running their businesses that they haven’t had time or just haven’t thought about a financial game plan.

“Their biggest concern yesterday was making payroll and then they look up and they have a lot of issues,” Cervantes said. “They don’t realize that half their estate could go to estate taxes, and they think it will go to their heirs 100 percent. I point that out and grab their attention.”

There also is a certain mistrust of financial institutions that might be carried from most Latin American countries, where currency fluctuations make people wary of investing in anything but hard assets.

“It’s not an easy market to go after,” Cervantes said. “The market is tremendous, but the one obstacle I’ve had is building that trust. I’ve seen a lot of financial consultants fail because it takes a long time to build trust.”

But with trust must come opportunity. And only 29 percent of Latino-owned companies offer a standard 401(k) retirement plan, according to a study prepared by the Tomas Rivera Policy Institute.

“If those opportunities are not there, it’s more difficult for those workers to put money aside,” said Waldo Lopez-Aqueres, director of economic policy research at the Claremont-based institute.

He also noted that because Latino workers are relatively young, they may not have the urge to save for retirement, nor are they pressuring their employers to provide 401(k)s. “And since they tend to have larger families, it’s not a priority,” Lopez-Aqueres said.

Merrill Lynch’s programs are an outgrowth of multicultural market research the firm did about four years ago. “Our research found a lot of times, the lingo doesn’t translate well. People found the financial services world foreign to them,” Collins said.

Even Griego, who is a sophisticated investor and follows the performance of companies she invests in, was a bit intimidated at first. “I was afraid. I thought, I don’t know this world,” she said.

In recent years, Merrill Lynch has produced educational materials and brochures on financial planning in Spanish, sent direct mailings to Latino areas with names and phone numbers of financial planners, and has conducted seminars in Latino communities. It also created a network of financial consultants interested in focusing on the Latino market.

The company budgeted $77 million in Los Angeles and Orange counties for a series of outreach programs, including loans to small businesses and for mortgage lending, educational programs and grants to community groups doing economic development.

“The demographic changes here are a reflection of what the firm will need to learn around the country eventually,” said Garrett Gin, community development manager for Merrill Lynch in Southern California.

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