1. Tahira Hira Departments of Human Development and Family Studies American Association of Family and Consumer Sciences June 23, 2007 1 How Different Cultures Approach Investing Tahira K. Hira – Iowa State University Caezilia Loibl – Ohio State University Tom Schenk Jr. – Iowa State University

2. Departments of Human Development and Family Studies Tahira Hira American Association of Family and Consumer Sciences June 23, 2007 2 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

3. Departments of Human Development and Family Studies Tahira Hira American Association of Family and Consumer Sciences June 23, 2007 3 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

4. Departments of Human Development and Family Studies Tahira Hira American Association of Family and Consumer Sciences June 23, 2007 4 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.

5. Departments of Human Development and Family Studies Tahira Hira American Association of Family and Consumer Sciences June 23, 2007 5 Demographics: Race & Ethnicity

6. Departments of Human Development and Family Studies Tahira Hira American Association of Family and Consumer Sciences June 23, 2007 6 Demographics: Gender

7. Departments of Human Development and Family Studies Tahira Hira American Association of Family and Consumer Sciences June 23, 2007 7 Demographics: Married

8. Departments of Human Development and Family Studies Tahira Hira American Association of Family and Consumer Sciences June 23, 2007 8 Demographics: Household Size

9. Departments of Human Development and Family Studies Tahira Hira American Association of Family and Consumer Sciences June 23, 2007 9 Finances: Debts, Assets, Debt Ratio

10. Departments of Human Development and Family Studies Tahira Hira American Association of Family and Consumer Sciences June 23, 2007 10 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.

11. Departments of Human Development and Family Studies Tahira Hira American Association of Family and Consumer Sciences June 23, 2007 11 Perceived Childhood Financial Security Percentage Responding Perceived Financial SecurityWhiteBlackAsianHispanic 1 (Not At All Secure)*4.00%9.86%0.00%5.80% 2*12.57%14.08%25.71%15.94% 3**22.29%29.58%20.00%34.78% 4***33.14%28.17%28.57%36.23% 5 (Very Secure)28.00%18.31%25.71%7.25% *indicates 99% confidence ** indicates 95% confidence *** indicates 90% confidence

12. Departments of Human Development and Family Studies Tahira Hira American Association of Family and Consumer Sciences June 23, 2007 12 Making Financial Decisions Percentage Responding “Often” or “Very Often” Decision MakerWhiteBlackAsianHispanic You, by yourself27.43%30.56%34.29%23.19% Spouse alone1.43%2.78%1.43%4.35% You and Spouse*56.29%56.94%60.00%60.87% You with others***6.00%4.17%1.43%4.35% Spouse with others***0.29%0.00% 1.45% Another Way***8.57%5.56%2.86%5.80% *indicates 99% confidence *** indicates 90% confidence

13. Departments of Human Development and Family Studies Tahira Hira American Association of Family and Consumer Sciences June 23, 2007 13 Investment Information Sources Information SourcesWhiteBlackAsianHispanic Financial Advisor 31.6%20.8%11.4%17.4% Internet 21.3%4.2%44.3%14.5% TV Programs 4.0%1.4%12.9%1.5% Radio 3.4%7.0%2.9%1.5% Classes or Workshops 2.6%8.3%2.9%5.8% Print Media** 23.0%16.7%24.3%20.3% Investment Club*** 2.7%2.8%2.9%1.5% Friends*** 8.1%13.9%4.3%13.1% Workplace*** 10.0%12.5%11.4%7.3% ** indicates 95% confidence ***indicates 90% confidence

14. Departments of Human Development and Family Studies Tahira Hira American Association of Family and Consumer Sciences June 23, 2007 14 Learning Preferences Percentage Who Responded "Agree" or ”Strongly Agree" Learning PreferencesWhiteBlackAsianHispanic Enjoy learning things** 85.0%90.3%91.4%92.8% Seminars are useful 51.8%80.3%73.9%68.2% Prefer discussing one-on-one** 86.4%95.8%88.6%84.1% Not interested in learning* 12.3%11.1%8.6%13.0% Prefer Self Research* 72.1%80.6%88.6%78.3% Want to know details 71.7%84.7%85.7%87.0% * indicates 99% confidence ** indicates 95% confidence

15. Departments of Human Development and Family Studies Tahira Hira American Association of Family and Consumer Sciences June 23, 2007 15 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.

16. Departments of Human Development and Family Studies Tahira Hira American Association of Family and Consumer Sciences June 23, 2007 16 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.

17. Departments of Human Development and Family Studies Tahira Hira American Association of Family and Consumer Sciences June 23, 2007 17 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.

18. Departments of Human Development and Family Studies Tahira Hira American Association of Family and Consumer Sciences June 23, 2007 18 Future Directions Determine causal relationships Longitudinal study Enlarge sample size Cohort Analysis