a total market approach - Prudential Financial

A TOTAL MARKET APPROACH O p p o r t u n i t i e s t o E x p a n d Yo u r Business with Diverse Customers

Blacks

| Hispanics | Asian Americans | Women | LGBTQ | Millennials

| 1

Stephen Pelletier EVP and Chief Operating Officer of U.S. Businesses Prudential Financial

Foreword

Total Market Approach

Since we launched our inaugural “A Total Market Approach – Winning with Women and Multicultural Consumers” in 2014, many of you have asked how to address these groups and others to leverage the cross-cultural insights Prudential has attained over the years. Understanding what motivates and influences specific segments is the first step to establishing success in the marketplace. On the surface, each segment may seem homogenous, but holding on to that misconception may cost your business.

Diverse consumers are the emerging force in America today, a trend set in motion by explosive population growth and expanded buying power in the multi-trillion-dollar range.

An essential strategy to truly embrace diversity is to consider consumers’ differences by culture, age, gender and sexual orientation. That’s why we’ve expanded this report. It now includes insights we’ve gathered concerning the Black, Hispanic, Asian American, Women, LGBTQ and Millennial consumer markets. Across the board, the majority of diverse consumers wants the same things – to have enough money to live through retirement, not become a burden to their loved ones, reduce personal debt, build emergency savings funds and take care of their families if something were to happen to them. But, saving for retirement, paying for their kids’ college or even starting an investment portfolio has proved to be more difficult for members of diverse groups. They need the knowledge and resources that Financial Professionals can provide. There is no time like the present to ensure your business is well-positioned for continued growth as our nation and, by extension, our workforce, grows increasingly more diverse. Tapping into these markets requires nuance and skill to build relationships and attain loyalty, referrals and business for years into the future.

Caroline Feeney President Prudential Advisors Prudential Financial

At Prudential, we believe in the transformative business power that diverse consumers represent in shaping current retail and institutional strategies. We also understand that making strides within these markets can help define and sustain the future of our industry. Our mission is to help all customers achieve financial prosperity and peace of mind. We look forward to partnering with you to expand the work that we do to help all Americans meet their biggest financial challenges.

Understanding the cultural elements and behaviors that drive our increasingly diverse customer base can help you forge long-term relationships. This report describes our most dynamic and fastest growing segments of the U.S. consumer economy. Prudential’s Total Market Strategy leverages key findings and cross-cultural insights to focus on financial decisionmaking trends for all diverse markets, with specific emphasis on multicultural consumers, Women, LGBTQ and Millennial segments. Our research indicates that the industry needs to do more for these groups. We’ve developed strategies anchored in consumer research, such as multicultural niche behaviors, values and needs, to provide business-growth-focused guidance to you and other members of our financial strategy teams. Our extensive research, as well as other industry-wide studies, can help you better understand the attitudes, motivators and cultural distinctions that impact financial behavior.

5

Business-Building Strategies for You to Tap New Markets

If diverse consumers are not a core focus in your overall business strategy, you may miss a vital growth opportunity. To succeed in their exponentially growing markets, here are several overall principles to remember:

Create a marketing plan that takes into consideration what you have learned about your target markets and how your products and services can relate to their goals

Excel in customer engagement with methods that work within each market’s comfort zone – whether they call for face-to-face meetings and phone calls or email blasts and social media content

Grasp the strategic differentiators for each market. Learn how culture affects individual consumer’s experiences, values, attitudes and behaviors 2 |

Take the time to learn about the customs and traditions that are important in these communities, especially how they relate to money and other life issues such as family and education

Prepare to get involved for the long haul. Building trust with new segments takes time. Make every effort to get involved within the targeted community and make a sincere attempt to get to know its members…but don’t expect new business right away | 3

10

IDEAS

to Help You Increase Engagement within Diverse Markets

Here are some examples of approaches that address specific concerns, goals and financial dynamics within certain markets. But in many cases, any of these ideas can be helpful to kick off important conversations with your customers. Members of diverse groups often relate best to Financial Professionals who efficiently manage their relationships with cultural understanding, education, alignment of investments & life goals and personal communication.

CONCERN for WOMEN

CONCERN for WOMEN

Feel uneasy that their investments won’t be available if needed, especially caretakers and/ or members of the “sandwich” generation–often women caring for their children and older relatives

Become divorced or widowed and are unsure of the state of their investments and/or the dependability of their spouse’s Financial Professional

APPROACH

Understand their need for financial flexibility. Share investment ideas with easy-to-access liquidity to give them breathing room if life becomes seriously disrupted by matters beyond their control

APPROACH

Provide an inclusive environment from the start of your financial relationship, especially with women who are part of couples. Recognize women as wealth creators and decision makers, not just spouses and inheritors

CONCERN for ALL

CONCERN for ALL

CONCERN for ASIANS, HISPANICS


Resist making greater contributions to retirement plans because of perceptions that their income is not high enough and other financial priorities take precedence

Admit being less knowledgeable about how to generate income before and during retirement

Perceive financial institutions do not understand them. The population is very diverse as is the level of acculturation

Aspire to retire earlier than the general population. But in reality, as they get older, they push out their retirement age more and more

APPROACH

APPROACH

Ask questions to connect on a deeper level and understand the individual needs and attitudes of each customer, given the diversity of these audiences

Share ideas to better prepare your clients to meet their aspirations of earlier retirement such as defining what it actually means to them, creating a retirement budget, determining when to collect Social Security and preparing for the unexpected

APPROACH

Show that not all retirement plans require large investments. Emphasize the value of small contributions for the future, which will not negatively impact running their households today

APPROACH

Help your customers set up and generate income streams while developing strategies for retirement and beyond. Provide tools and projections to keep track of yearly/monthly returns

CONCERN for ALL

CONCERN for BLACKS, MILLENNIALS



Worry that you may not understand their risk tolerance

Black parents inclined to defray college costs using IRA or 401(k) savings and many Millennials who want to pay down heavy college loans instead of contributing to retirement plans

Demonstrate heightened levels of concern about taking care of family, especially with caregiving and supporting family in the U.S. and overseas

Vary on the amount of financial support they provide loved ones, both inside and outside of the U.S.

APPROACH

APPROACH

Communicate how certain financial products may help maintain a standard of living for their family in the event that they die unexpectedly or become disabled

Learn more about the role of dependents, elders and extended family and how it affects the customer’s finances to ensure you provide relevant advice

APPROACH

Discuss spectrum regarding risk tolerance investment approaches. Show how a tooconservative approach might under-deliver vital income in retirement

4 |

APPROACH

Produce and share possible alternatives that suggest financing children’s college tuition with loans and the use of 529 plans vs. retirement funds. For Millennials who have accrued large college loans, suggest how saving for retirement is about consistency vs. large sums

Sources: Prudential: A Total Market Approach–Winning with Women and Multicultural Consumers, 2014. The African American Financial Experience, 2015-2016. Hispanic American Financial Experience Study, 2014. Asian American Financial Experience, 2016. Financial Experience & Behaviors Among Women, 2014.

| 5

Insights of Financial Goals by Market The top five most relevant financial priorities for all U.S. consumers include1: 1. Have enough money to live through retirement

2. 3. 4. 5.

Not become a burden to their loved ones Reduce personal debt Build emergency savings funds Take care of their families if something were to happen to them

Further research within each diverse market shows that financial priorities and needs begin to vary according to cultural differences. Some specific items that stand out for each audience are listed below.

Black Consumers

Women Consumers

Having multiple ways to generate income

Protecting investments and retirement savings from market volatility

Saving for a major purchase other than a home (e.g., car, vacation)

Being financially secure in the event that I outlive my spouse

Passing on money as an inheritance to my children/heirs

Securing long-term health or nursing home care for retirement

Buying a home

Giving to charities, communities or educational foundations

Hispanic Consumers

LGBTQ Consumers

Funding education for child(ren)/grandchild(ren)

Being financially independent/Not being a financial burden

Protecting existing investments and savings

Having enough savings to last my lifetime

Saving to purchase a home

Building or growing an emergency savings account

Saving for a major purchase other than a home (e.g., car, vacation)

Maintaining a standard of living for my family in the event that something were to happen to me

Hispanic Consumer Information comes from Hispanic study.

Asian American Consumers

Millennial Consumers

Having enough money to maintain my lifestyle throughout my retirement

Keeping up with rising healthcare costs

Not becoming a financial burden to my loved ones Having enough money to cover an unexpected medical cost Making sure I do not outlive or fully spend all of my savings

Maximizing growth of my current investments Saving for a major purchase other than a home (e.g., car, vacation) Taking care of parents or other family members Sources: Prudential: A Total Market Approach–Winning with Women and Multicultural Consumers, 2014. The African American Financial Experience, 2015-2016. Hispanic American Financial Experience Study, 2014. Asian American Financial Experience, 2016. Financial Experience & Behaviors Among Women, 2014. The LBGT Financial Experience, 2016-2017.

6 |

| 7

Growing Populations with Strong Buying Power

Opportunity: Help All Customers Save for Retirement

Black, Hispanic and Asian American consumers now account for more than 36 percent of the United States 2016 population.7 Members of diverse market segments represent a significant growth opportunity for Financial Professionals ready to expand their businesses. The following breakouts will give you a taste of each market’s exploding growth.

Even among Non-Hispanic White households, only 65% report that they have retirement savings.11 This percentage drops among Asian American, Hispanic and Black households.

Black Consumers

Information in this report provides key points and cultural nuances to reach these consumer segments and help them become more financially aware.

For clarity in this report, we use the term “Black” to encompass both U.S.-born African Americans and foreign-born immigrants. Regardless of terms, Black consumers’ buying power in the U.S. is estimated to reach $1.4 trillion in 2020, up from $320 billion in 1990.8 This growth is augmented with immigrants from the Caribbean and Africa, nearly 140,000 persons per year.7 The number of consumers from Black households earning $75,000 or more per year is growing faster in size and influence than Non-Hispanic Whites in all income groups above $60,000.9 And as their incomes increase, their spending surpasses that of the total population in areas such as insurance policies, pensions and retirement savings.9

Among those households that do have retirement savings, 93 percent have more than $10,000, yet the median balance for retirement account assets is only $30,000 for near retirees.11

Percentage of households with savings in a retirement plan or IRA

65%

58%


Prior to the 1965 Immigration and Nationality Act, Asians made up less than one percent of the U.S. population. Today, the Asian American market has the highest growth rate of any multicultural segment in the U.S., increasing 56 percent from 2000 to 2013.4 By 2055, the Asian American population is expected to double.4 According to the 2014 U.S. Census, there are an estimated 15.7 million Asian Americans in the U.S.10 With the estimated buying power of $825 billion as of 2015 and potential growth to $1.1 trillion in 2020, this multicultural segment is only growing stronger and more influential.4

NONHISPANIC WHITES

ASIAN AMERICANS

Hispanic Consumers

The population of Hispanics rose to approximately 36 percent in 2016. Today there are nearly 60 million Hispanics in America and by 2021, there will be 68 million, growing on average by 1.6 million each year.3 The GDP of the U.S. Hispanic market in 2015 was $1.3 trillion, which is larger than Mexico.8 The largest sub-segment of acculturation is second-generation Hispanics who share both American culture and their family’s heritage. Nearly 64 percent of Hispanics are bilingual to some degree and 78 percent speak some level of Spanish.3

41% BLACKS

26% HISPANICS

Source: The Unique Retirement Savings Challenges of Women, Minorities and Millennials. Financial Services Roundtable, June 2016.

8 |

| 9

Black Consumers Black Consumers Are NOT Homogenous So why use the term “Black” as opposed to “African American?” This is a common debate many marketers struggle with in an effort to be culturally sensitive. In most cases, the use of either term is acceptable today and are used interchangeably, as in this report. While African Americans make up the majority, the U.S. Black consumer segment is an ethnically and culturally diverse population including those who identify as a combination of Black and another race. Immigrants come from the Caribbean, Central America, South America, Africa and Europe. The top birthplaces for Black immigrants include Jamaica, Haiti and Nigeria.2 Immigrants now account for nearly nine percent of the U.S. Black population, enriching the cultural mix and contributing to a rise in education and affluence.2

Black consumers have ongoing financial challenges including long-term financial planning and personal debt. There are several touch points for Financial Professionals to use to help educate and aid members of this group. While more than half of Black consumers report having high levels of confidence in financial matters, a much higher percentage describe themselves as savers, rather than investors.2 The relatively low percentage of self-described investors suggests opportunities exist for Financial Professionals to financially encourage members of this segment to consider how investments may support their long-term goals. For example, as far as employer-sponsored retirement plans, Black consumers have equal rates of access, but lower participation than the general population. This difference is primarily seen in the lower- to middle-household income brackets. 2 A majority of Black consumers have been contacted by Financial Professionals, yet only small percentages currently work with one– approximately one in ten.2 The most common reasons why include a sense that they don’t have enough assets or that they prefer to manage their money on their own. Yet, there are many who are unsure of their knowledge of investing, planning for wealth transfer or leaving money for the next generation and saving or investing for a child’s education.2 This uncertainness presents more potential informationsharing opportunities for Financial Professionals. Finally, on average, Black caregivers spend more than 20 hours per week on caregiving responsibilities, which can also include substantial financial commitments. Reports show nearly two-thirds of Black caregivers provide some or all financial support to those to whom they provide care.2

Increasing Population and Earnings The good news is that African-American income growth rates outpaced those of Non-Hispanic Whites at every annual household income level above $60,000.9 In fact, the largest increase for African American households occurred in the number of those earning over $200,000, with an increase of 138 percent, compared with a total population increase of 74 percent.9 Of the 116 million multicultural consumers in the U.S. in 2014, African Americans comprised almost 40 percent. Fueled by an upswing in immigration, the Black segment grew 30 percent more quickly than the total population from 2000 to 2014.9

Faith-Based Strategy via dfree® Prudential research provides new strategic ways to continue our efforts in educating underserved communities about financial wellness and our brand. In 2014, Prudential forged a sponsorship with Rev. Dr. DeForest B. Soaries, Jr., creator of the dfree® Financial Freedom Movement. dfree is a 12-week training program designed to help individuals change their behavior as it relates to money in order to improve their financial situation–such as becoming debt free and taking more control of their finances. The dfree course is deployed through churches and community organizations. Individuals can also take the courses virtually. More than 650 churches nationwide are members of the program. Many Financial Professionals who have developed relationships and attend events within these dfree, faithbased communities have seen positive lead generation and additional business. The partnership between dfree and Prudential has helped provide financial awareness and educational programs to thousands of people in a previously underserved market.

Prudential established its brand and commitment to empowering the consumers within the faith-based market. It has become a strategic differentiator in our highly competitive industry. 10 |

| 11

Hispanic Consumers

Long-Term Financial Strategies for Hispanics Difficulties for Hispanics in preparing for longterm financial security stem from several trends. The Hispanic community places a high priority on funding near-term goals such as reducing debt, purchasing a home or creating an emergency savings account, and many are supporting their multigenerational families. As far as family finances, household expenses, health care costs, savings and debt level – all near-term concerns – are ranked higher than saving for retirement. Family finances are often multigenerational and global, as evidenced by one in six Hispanic households supporting their parents and 42 percent of non-U.S. born sending money to relatives in their home countries.3

Yet, Hispanics are equally as likely to work with a Financial Professional if contacted.3 As with other multicultural consumers, they are most interested in sound financial advice from Financial Professionals that they trust who offer assistance that relates to their specific situations. To support that assertion, 86 percent indicated that ethnicity or race did not matter when choosing a Financial Professional.3 In fact, Hispanics’ strongest preference is working with an individual who is involved in their local community.

For retirement planning, more than half of Hispanics surveyed – regardless of income or country of birth – indicate a “poor” or “very poor” understanding of U.S. workplace-based retirement plans and Social Security. They cite less access and lower contributions to workplacebased retirement plans. In fact, 17 percent of employed Hispanics are unsure if their employers provide matching retirement contributions.3 Approximately two-thirds of Hispanics are born in the U.S. But cultural influences run deep. In the Hispanic community, personal debt is culturally taboo.3 In a recent Prudential financial survey:

Despite the aversion to debt, here’s the reality: 69 percent indicated it’s nearly impossible to live debt free.3 This paradox has created educational opportunities for the financial services industry.

• 62 percent assert that there is no such thing as “good debt” 3

Differing cultural interpretations of “long term” are important to note when it concerns retirement. The general population generally thinks of “long term” as 30 to 40 years, while Latinos are more likely to define “long term” as a much shorter period, such as three to five years.11

The language of financial services is challenging for both English and Spanish speakers. Even so, receiving information in a preferred language ranked extremely low in our survey, at only seven percent. Hispanics also claim to experience more difficulty with trusting providers of financial products or services and not knowing where or who to go to for information.3

With almost six million Hispanics between the ages of 50 and 64 in the U.S., there is an opportunity and mandate for Financial Professionals to understand how to support retirement goals for aging Latinos.11

Hispanic respondents are only half as likely to have been contacted by a Financial Professional when compared to the general population, even among higher household incomes of $75,000 or more.

• 49 percent indicate a preference to pay cash for an item or not buy it all3 • 37 percent indicate they are more of a “saver” than an “investor.” However, nearly as many– 36 percent–say they are “neither a saver nor an investor” 3

12 |

Tremendous Opportunities Await You

This paradox affords you a strong opportunity to offer financial education and solutions to the Hispanic community. You can also create awareness by touting Prudential’s commitment to supporting Hispanics’ financial empowerment and professional development.

| 13


National Distribution of Population Among Asian Americans in the U.S. According to our survey, Prudential Asian American Financial Experience, 2016, 91 percent of the Asian American population most represented in the U.S. come from the following “big six” countries:4

China (Hong Kong) (Taiwan) – 20 percent India – 18 percent Philippines – 16 percent Vietnam – 11 percent Korea – 9 percent Japan – 5 percent The balance of survey correspondents come from Hawaii/Pacific Islands, six percent, and other countries, 16 percent, which include Bangladesh, Cambodia, Indonesia, Laos, Malaysia, Pakistan, Singapore, Sri Lanka and Thailand.4 The respondent breakdown represents: 4 U.S.-born – 27 percent Foreign-born – 73 percent

Strong family ties are the hallmark of many Asian American households. Investment in family is high. They place weighty priorities on providing college tuition for their children, helping to take care of family members and buying a home.4 Generally, Asian Americans provide more care and take on the financial burden for others, for example, by providing financial support of extended family, including sending money overseas. But, the younger generation is more focused on debt reduction and nest building (buying a home and building an emergency savings account).4 Like other U.S. consumers, Asian Americans are most confident in knowledge of everyday finances and less so for long-term financial needs. Some of those needs include more information on life insurance, planning for income streams and medical expenses in retirement, investing and planning for succession of wealth.

Earning Their Trust Asian Americans are information hungry when it concerns financial knowledge. But despite seeking information from many sources, 69 percent say they are not well prepared to make financial decisions. Reasons respondents stated include: lack of experience, hard-to-understand industry jargon and the uncertainty in finding/vetting solutions. Some 31 percent say it is because they have not consulted a Financial Professional.4

Asian American Financial Experience by the Numbers

33% $87K 1in3

are caregivers for family members

median household income

own individual stocks

Key reasons why include too-high fees, feeling they lack enough assets and their do-it-yourself mentality. The sentiment of 21 percent, “I have never found one I can trust,” is also a strong reason for not using a Financial Professional. In addition, 48 percent of respondents who cite distrust are also the most likely to think fees are too high.4 Convincing these particular Asian American consumers to consider a relationship with you takes resourcefulness. Age, wealth, birthplace and language all influence their decision. Older and wealthier Asian Americans are more likely to be working with a Financial Professional than younger generations. However, among all members of this segment who do not use your services, younger Asian Americans are more willing to consider it than their older counterparts.4 How can you earn their trust? Asian Americans advise that the best ways to build trust is to treat them with respect and follow through on your promises. A significant percentage also advocate that Financial Professionals be upfront, transparent and provide information appropriate for their individual level of financial experience and knowledge.

fewer than

64.6 69% 1in5

age they expect to retire 14 |

view themselves as not well prepared to make financial decisions

work with a financial professional

Source: Prudential Asian American Financial Experience, 2016

| 15

Women Consumers

For women, there are several primary factors that impact financial wellness across the social and financial spectrum, which often undermines their security in later years. These life events can place excessive pressure on retirement resources. No matter what their race, ethnicity, age, occupation or education – generally all women are impacted by the gender wage gap.13 One often-cited statistic comes from a 2016 U.S. Census Bureau report that shows women earn 79 cents per every one dollar men earn in the U.S.13 The report also shows a woman’s race or ethnicity affects her income. Relative to Non-Hispanic White men, Black and Hispanic women workers are paid only 65 cents and 58 cents on the dollar, respectively.13

Compared with men, women often deal with these additional challenges: • Living longer than their male counterparts

Women of color are important contributors to household income. Studies show a high percentage of Asian American and Black women earn more than their partner. Among married women of color with a household income of $75,000 or more, 50 percent manage financial decisions solely or with input from their partners.1

• Depositing less in company-sponsored retirement plans • Ending up with smaller amounts in long-term savings accounts All of these factors make it very clear that the average woman will need more money for retirement. You have the tools and knowledge to help her figure out how to achieve that goal.

On the other hand, The Bureau of Labor Statistics says that 65 percent of employed Hispanic women

and 59 percent of employed Black women work in low-wage jobs including service, sales and office occupations, which means they’re also less likely to have access to retirement plans.1 Women also play a significant role in shaping the financial realities of the next generation. They are often the stewards of family wealth, and will control 70 percent of intergenerational wealth transfer in the next 40 years.1

Should You Approach the Women’s Market Differently? Longer Life Expectancy

Primary Caregiver

Cultural background, generation, source of wealth and asset level are all factors affecting how women perceive wealth and arrive at decisions about its allocation. Connecting to the women’s market requires that you discern what each woman wants and how they wish to be advised.

• Money needs to last longer5 • Women’s average life expectancy is 87 years,compared with 84 for men11 • Are more likely to be disabled and both need and/or provide chronic illness care11

The prosperous female market is remarkably under represented by Financial Professionals: 47 percent of U.S. wealth creators and an overwhelming 75 percent of women under 40 do not work with one.14

• More likely to leave the workforce intermittently5 • Some stay home to care for children5 • Care for parents or other dependents5

• 80 percent will be single in their final years with a higher tax rate than married couples

12

Retirement Catch-Up 16 |

• On average, earn less than men13 and don’t save at a high enough rate to cover retirement expenses11 • Generally have less in savings, pensions and Social Security benefits11

It’s time to capture this immense missed opportunity of possibly more than $5 trillion in assets “left on the table.” Especially since unmanaged assets are typically underleveraged.14 Women in the U.S. using the services of Financial Professionals hold, on average, only nine percent of

their portfolio in cash, while those without Financial Professionals have, on average, 20 percent in cash.14 Underleveraged capital represents a lost opportunity for women to fulfill their aspirations for themselves, their families and their communities. Unfortunately, of those women who do work with Financial Professionals, 67 percent report feeling their needs are not understood and that there is a lack of interest in them. This trend holds true across the female market, irrespective of age, ethnicity or asset levels.14 In working with women, you need to help them overcome any misperceptions they have about the financial industry. In the same vein, Financial Professionals have to forgo the tendency to perceive women as a homogenous market.14 | 17

LGBTQ Consumers

In recent years, much progress has been made for the LGBTQ community in terms of certain legal rights – especially marriage equality. But, the lingering financial barriers faced by this population are significant – including issues related to pay equity, equal job rights and survivor benefits. Income gaps have been linked to both gender identity and sexual orientation.6 Not surprisingly, this group shows some signs of financial stress. All of this data and more resulted from the survey Prudential: The LGBT Financial Experience, 2016-2017. Some trends uncovered regarding LGBTQ financial situations are due in part to the relative youth of the community; significantly more Millennials and fewer Baby Boomers. While saving enough to last their lifetime is a top financial goal for most LGBTQ community members, meeting their goals to prepare for their financial future will hinge on finding ways to spend less. At this point, many are trying to figure out how on their own. They tend to assume they are not affluent enough or that they don’t have enough financial assets to require a Financial Professional’s help.6

Self-described “Spenders” The LGBTQ population is very focused on savings and retirement. It remains a top financial goal regardless of gender, generation and sexual orientation. Even so, LGBTQ consumers are more likely to consider themselves “spenders,” especially on necessities, so they are further from their goal of saving money.6 It’s not surprising that overwhelmingly, LGBTQ consumers say they need to gain more knowledge or experience to undertake their financial planning across all generations – although the need is particularly more glaring within Millennials and Gen-Xers.6 What will make it harder to achieve these goals? Approximately four in ten LGBTQ consumers report potential job loss and inflation. However, they are even more concerned about the potential for debt, lack of job opportunities, lack of ability to afford a good Financial Professional and wage inequity due to discrimination.

Your Opportunities with LGBTQ Consumers There are ways for you to help more customers in the LGBTQ community gain knowledge and change their 18 |

mindset to promote more realistic financial choices. Keep in mind several special considerations and attitudes that influence their decisions. Among some of the unique issues are spousal retirement benefits, state & company pensions and how to handle beneficiary concerns & long-term care policies. You can help provide answers for concerns such as whether LGBTQ partners will get Social Security or retirement benefits, how to ensure that partners inherit each other’s assets and whether it is financially smart to marry or make financial plans separately. Our report findings also suggest that the LGBTQ community cares deeply about social equality for all, and that working with socially conscious firms is particularly important. Half of our study’s respondents are much more likely to work with a company that supports equal job rights and benefits equality.6

Top 3 LGBTQ questions for a financial professional 6

1

What options are available?

2

hat should I consider when W evaluating options?

3

How do I get started?

To gain ground in this area, you can discuss Prudential’s three-pillar approach. You can also share your personal knowledge about the company. Prudential was founded more than 140 years ago on the belief that everyone should have the opportunity to achieve financial security and the peace of mind that comes with it, regardless of age, gender or sexual orientation. This founding belief continues to drive our efforts to empower the ambitions of people, organizations and communities. | 19

Millennial Consumers

Millennials believe in their modern day American Dream, but their definition of success is not only about money. What success means may vary depending on which consumer marketing segment you ask. As of 2015, 83.1 million Millennials (ages 20 to 36) represented one quarter of the U.S. population; 44 percent belong to a diverse or ethnic community.15 This diversity in background and upbringing is a prime reason diverse marketing strategies provide a better platform than approaching Millennials as one homogenous group. This multi-faceted segment is one to cultivate, since its members will be wielding serious financial clout. In the next 10 to 40 years, approximately $30 trillion of wealth will transfer from Baby Boomers to Gen-Xers and Millennials.16 Yet evidence suggests that while Millennials understand the importance of financial responsibility, inaction is causing anxiety.17

Financial Anxiety Some 50 percent feel out of control of their finances. They lack the financial knowledge to make wellinformed decisions related to managing their resources, such as how to make ends meet while planning ahead with retirement accounts, investment accounts or just setting aside a rainy day fund. The decisions they are making today may affect their financial security over their lifetime, but many Millennials say they have no idea how much they need to save for retirement. 17 In fact, less than half of Millennials feel that they’ll be able to retire, yet are not saving for the long-term. Why? Because of what is happening in their lives today vs. the future. Results from Prudential’s Student Debt Survey show that college debt is a very emotional topic for 17- to 34-year-olds.18 About 40 percent have debt that prevents them from saving.17 But, paying down their debt is important to them.16 Additional Millennial data include: 17 • 50 percent feel they do not have enough money to meet their day-to-day needs, though a quarter report overspending regularly • 60 percent are not actively saving for the long term

20 |

• 47 percent financially support their households • 2 in 5 say debt keeps them from saving money • Only 1 in 2 feel “in control” of their money management In spite of their financial apprehension, many Millennials are starting families and owning homes much faster than they’re achieving their financial goals. Providing for family is a top indicator for Millennials’ financial success.17 Millennials realize they will have to do more to prepare for their retirement than previous generations. Additional key drivers and motivation for them to become more comfortable working with financial institutions include:16 • Allay concerns about information security • Demonstrate ability to do everything online such as research and live chats • Show how company embraces social responsibility by investing in social and community causes

Approach Millennials Prepared Millennials are very open about what they want and need when dealing with Financial Professionals. On a very positive note, 66 percent would trust information from an in-person meeting with you when making decisions about their finances. You’ll spark their imagination and encourage them by sharing examples of how many of their peers have found paths to reach their financial freedom. Since Millennials are so digitally savvy, interacting via social media is also a key step in the right direction. Providing your own personal, unique twist in reaching them may help win over a long-term client. They respond to content when it is tailored to their age group and their cultural interests; they enjoy/prefer humor.17 Try including new interactive approaches such as short, message-driven videos and targeted digital content in your presentations or communications. Consider using LinkedIn and Facebook as marketing tools as well. Go, go, go where the Millennials go. The way to show interest is by engaging where they live–online.

| 21

A Few Clues to Use If You Target Multicultural Millennial Consumers Hispanic Millennials Approach Hispanic Millennials differently than their older counterparts. Go one step further to recognize and leverage the differences between U.S.-born and foreign-born. Younger Hispanics have a pragmatic approach to money and are not overly irresponsible or impulsive when it comes to spending. Avoiding debt is important. In fact, Hispanic Millennials are more debt averse than their parents and older Hispanics. Clearly define the role of financial strategies by offering educational advice to support their long-term future financial success. Then provide more complex financial products in the future. Hispanic Millennials are more likely to use innovative, technology-savvy financial institutions that care about the community. More males than females are open to non-traditional banking relationships (e.g., digital forms of payment).

African American Millennials

RESOURCES

They express the most concern about their current and future finances. As they have the lowest income of the groups interviewed, saving money can be a challenge so they are forced to be pragmatic and risk-averse about their finances.

1. Prudential: A Total Market Approach–Winning with Women and Multicultural Consumers, 2014.

Like most Millennials, African Americans have a mostly positive image of financial institutions. However, they are the least likely of the groups to look there for a loan. Payday/cash loans are a common source of funds.

5. Prudential: Financial Experience & Behaviors Among Women, 2014.

They are clear on what they value most in a financial institution–good customer service, ease/ convenience, low fees and reliability. They also expressed a need to have a relationship.

9. Nielsen. The Increasingly Affluent, Educated and Diverse–African-American Consumers: The Untold Story. 2015.

Next to Non-Hispanic White Millennials, African American Millennials are the most likely to say they will get a mortgage in the future. However, most are unaware of how much they will need for a down payment. They are more open to innovation and new ways of conducting financial transactions compared to NonHispanic White Millennials.

Asian American Millennials

Home ownership continues to be an objective and source of pride.

Their most important financial goals are more immediate, including reducing debt, building an emergency fund and buying a home. In contrast, Baby Boomers in this segment are most concerned with having enough money to maintain their lifestyle in retirement.

This multi-faceted segment is one

One-third describe themselves as spenders, compared to 25 percent of Gen-Xers and 22 percent of Baby Boomers in this segment.

to cultivate, since its members are going to be wielding serious financial clout. In the next 10 to 40 years, approximately $30 trillion of wealth will transfer from Baby Boomers to Gen-Xers and Millennials.

16

Interestingly, 21 percent say they are well prepared to make wise financial decisions, yet 25 percent say they have no idea how much they need to save for retirement. Only 12 percent work with a Financial Professional, but 53 percent are open to working with one. Of those who do work with one, the Financial Professional was often referred by the Millennial’s employer. They are no more or less likely than other generations to feel that financial institutions really understand their needs.

2. Prudential: The African American Financial Experience, 2015-2016. 3. Prudential: Hispanic American Financial Experience Study, 2014. 4. Prudential: Asian American Financial Experience, 2016. 6. Prudential: The LBGT Financial Experience, 2016-2017. 7. Geoscape. 2016 American Marketscape DataStream (AMDS) Executive Summary Report. 8. Selig Center for Economic Growth, University of Georgia. 2015 Multicultural Economy Report.

10. U.S. Census 2014. 11. Financial Services Roundtable (FSR). The Unique Retirement Savings Challenges of Women, Minorities, and Millennials. June 2016. 12. Manisha Thakor and Sharon Kedar. On My Own Two Feet. 2007. 13. Economic Policy Institute. What is the gender pay gap and is it real? 2016. 14. Center for Talent Innovation. Harnessing the Power of the Purse: Female Investors and Global Opportunities for Growth. 2014. 15. U.S. Census 2015. Millennials Outnumber Baby Boomers and Are Far More Diverse. 16. Accenture. The “Greater” Wealth Transfer. 2015. 17. Edelman. Millennials & Money. May 9, 2016. 18. Prudential: Student Loan Debt Survey, 2016. 19. ThinkNow Research. Total Market Consumer Sentiment (African-American Focus). 2016. 20. ThinkNow Research and Sensis. The Hispanic Millennial Project Wave 3: Hispanics and Financial Services. 2015.

Results of the surveys reflect broad generalizations, averages and only some of the characteristics of the broadest depiction of the women and diverse communities. As such, results of analyses do not necessarily describe some or all of the groups that comprise those market segments or communities. Prudential recognizes that substantial variations in individual experience exist and these surveys should not be used as a basis for assuming that all persons within those segments and communities have the characteristics cited. The Prudential Insurance Company of America and its affiliates, Newark, NJ. © 2017 Prudential, the Prudential logo, the Rock Symbol and Bring Your Challenges are service marks of Prudential Financial, Inc. and its related entities, registered in many jurisdictions worldwide. Prudential is an equal opportunity employer. All qualified applicants will receive consideration for employment without regard to race, color, religion, gender, sexual orientation, national origin, genetics, disability, age, veteran status, or any other characteristic protected by law. These materials are for informational or educational purposes only. The information is not intended as investment advice and is not a recommendation about managing or investing your retirement savings. In providing these materials, the issuing companies and distributor listed above are not acting as your fiduciary as defined by the Department of Labor.

It is noteworthy that 14 percent receive regular financial assistance from their parents. Sources: For Hispanic and Black Millennials: Edelman. Millennials & Money. May 9, 2016; ThinkNow Research. Total Market Consumer Sentiment (African-American Focus). 2016; ThinkNow Research and Sensis. The Hispanic Millennial Project Wave 3: Hispanics and Financial Services. 2015. For Asian American Millennials: Prudential: Asian American Financial Experience, 2016.

22 |

| 23

P R U D E N T I A L

24 | 0303616-00001-00