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How Different Cultures Approach Investing Tahira K. Hira – Iowa State University Caezilia Loibl – Ohio State University Tom Schenk Jr. – Iowa State University
Objectives • Analyze characteristics of high net-worth households by racial/ethnic groups • Explore patterns of financial socialization • Determine primary investment decision makers • Identify Adult Learning Preferences & Investment Information Sources
Background • Financial Socialization • Parental Involvement • Financial role-models • Financial decision makers • Sole decision • Joint decisions with spouse or others • Learning Preferences • Investment sources • Learning Preferences
Procedures • Households with annual incomes greater than $75,000. • Identified four racial and ethnic groups: • Whites, Blacks, Asian/Pacific Islanders, Hispanics. • 911 Telephone interviews between 10/05 and 2/06. • National Stratified Random Sample • Average interview time: 22 minutes.
Financial Socialization • Similar findings among ethnic groups: • Lack of parental discussion of money • Strong recollection of parental concern over money. • School teachers have minimal impact. • Strong parental influence on financial knowledge. • Exception: • Asian parents were most likely to discuss the importance of savings.
Summary - similarities • Little perceived influence from parents and teachers. • Respondents perceived financial insecurity as children. • Joint (with Spouse) investment decisions. • Strong desire to learn. • Less likely to use radio, classes, and investment clubs.
Summary - differences • Asians were more likely to feel financially insecure as children. • Asians less likely to use financial advisors, more internet/TV users. • Whites are less likely to find seminars helpful and less detail oriented.
Implications • Individuals: • Discuss money management with children. • Financial Professionals: • Minorities under-utilizing financial advisors • Discount brokers • Educators: • Adults are typically willing to learn. • High-tech media is not being employed.
Future Directions • Determine causal relationships • Longitudinal study • Enlarge sample size • Cohort Analysis