Brokers Investing Effort to Lure Minority Clients
When Evan Ling began expanding the Industry branch of Merrill Lynch & Co. recently to accommodate its growing Asian clientele, he wanted to ensure the new office would be culturally appealing and feng shui correct.
Bowing to cultural norms and a 3,000-year-old Chinese practice, attention was paid to such details as partition and artwork placement, and making sure “8”--a symbol of prosperity--appears in each account number. But Ling drew the line when someone suggested adding goldfish, considered by many Chinese to be a symbol of good luck.
“If you put a goldfish tank in there, it would look like a restaurant,” said Ling, who opted instead for artwork depicting goldfish and bamboo, a symbol of peace and upward mobility.
Merrill Lynch is part of a growing cadre of U.S.-based brokerages attempting to create a commercial comfort zone to woo minority investors, many of whom traditionally have been skittish about the stock market, through a variety of programs.
The efforts represent the largest multicultural marketing pitch for an industry that has taken heat for having a less-than-diverse customer base and personnel pool.
And though some worry that the recent downturn in the stock market may slow the various minority initiatives, officials at several financial-services firms say the programs remain strong and in many cases are growing.
Ultimately, insiders say, as more minority entrepreneurs join the ranks of the well-to-do, companies seeking to serve them will look beyond racial color to the common denominator: green.
“The face of affluence in America is changing,” said Mindy S. Ross, a senior vice president with Salomon Smith Barney, who directs that company’s target marketing initiative. “It’s more inclusive and we have to be there, letting them know that we want to do business with them. We were a firm with a very traditional [white, male] client base . . . and that was a strategy that couldn’t continue,” she added. “The money is no longer just in that segment of the population.”
U.S. Census Bureau figures from 1999 show the median household income in the Asian/Pacific Islander community was $51,205, up from about $45,000 in the early 1990s and the highest figure for any ethnic group. The 1999 median household income was the highest ever recorded for African American ($27,910) and Latino ($30,735) households.
Though wealth among minorities has grown steadily--thanks in large part to explosive growth in the number of minority-owned firms--minorities remain a disproportionately small portion of the stock-trading community.
“Many things account for that,” said Michael DeFlorimonte, vice president of African American investor services with Charles Schwab Corp., offering results from annual African American investor surveys that the firm conducts with Chicago-based Ariel Mutual Funds.
“There was a significant lack of trust of the financial-services industry,” said DeFlorimonte. “We saw that extended to brokerage companies.”
More African Americans than whites, for instance, believe that brokers’ greed may influence the advice they give, Schwab found. It doesn’t help, DeFlorimonte said, when “you go into a branch and you don’t see someone who looks like you.”
Stretching the comfort zone can extend to custom-tailoring placement of walls and artwork, said Hugo Zhang, assistant vice president of the Merrill Lynch branch in Industry.
“It’s subtle,” Zhang said. “We want the clients to feel comfortable, and for a lot of people from Asia, feng shui is very, very important.”
The efforts to appeal to a broader clientele have gone far beyond artwork and account numbers.
Across the country, brokerages have put millions of dollars into minority initiatives, much of it being spent within the last two years.
Consider:
* In June, Schwab opened its first branch catering to Korean Americans, an outlet in Los Angeles’ Koreatown that brings to 15 the number of Asian-focused branches nationwide that have been launched as part of the company’s Asia Pacific Services program. Late last year, the company launched its Vietnamese Services Hotline, featuring bilingual licensed representatives to give information on various financial topics.
* On July 17, Salomon hosted its first financial symposium aimed at New York-based Latino investors. Among the keynote speakers was Andy Unanue, chief operating officer of Goya Foods Inc., one of the nation’s largest producers of Latino foods.
* In May 2000, Merrill Lynch increased to $236 million from $77 million its commitment to a three-year multicultural marketing program in California. The California Partnership for Economic Achievement will include funds to increase the number of minorities working at Merrill Lynch and outreach to minority investors in Southern California and the Bay Area. A company spokeswoman said the program may be expanded to markets outside the West.
Even with those steps, the brokerage industry still has a way to go to shed its image of being less-than-open to minorities as customers or employees.
A few days before Salomon hosted its New York event, the brokerage announced it had settled a lawsuit filed by the Equal Employment Opportunity Commission that accused the securities firm of discriminating against a group of African American, Haitian, Nigerian and West Indian employees in a small data center.
Salomon agreed to settle the suit but denied breaking any laws, according to a memo distributed to employees.
Target of Several Discrimination Suits
Merrill Lynch--which in July named Stanley O’Neal, an African American, president and chief operating officer--has been sued several times in the past by company employees, and at least once by federal regulators, over alleged discrimination.
The company vowed in 1998 to increase the number of women and minorities in its ranks of vice presidents and above. Increased minority hiring, especially of bilingual financial advisors, has been a key component of the current minority outreach efforts.
Meanwhile, Carol Davis, president of the North Carolina-based Coalition of Black Investors, worries that the budding minority outreach efforts may get a stifling bearhug from the current sluggish stock market as financial-services firms look to cut costs in the fallout from the Internet’s dot-bombs.
“I think this year, by the stock market not being as exciting, some of the marketing initiatives have been scaled back and some of those dollars have not been spent,” said Davis, who added that reduced financial support from financial-services firms forced the organization to cancel this year’s national conference.
Officials with several brokerages said their overall minority efforts are sound, even if curtailments felt companywide cut into those programs.
“We’re growing our ethnic initiatives,” said Schwab spokesman Mike Durand, who acknowledged that the 2,000 job cuts announced in March impacted its Asia Pacific Services program.
“We’ve had up and down markets before and we continue to invest in services that will help us grow, including the ethnic initiatives,” Durand said.
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Karen Robinson-Jacobs covers minority and immigrant-owned businesses for The Times. She can be reached at karen.robinson@latimes.com.
