The Myth of the 'Asian American' Client
There is no one-size-fits-all financial advice for the incredibly diverse Asian American audience, so it is important to understand your clients on a case-by-case basis.
Editors Note: This column continues our series on the intersection of financial advice and different cultures, historical backgrounds, and identities. Moringstar Direct and Office clients can find more articles and research on diversity, equity, and inclusion here.
I've been following the rise of anti-Asian hate crimes in the United States over the past year. Then, in early March 2021, there was a mass shooting in Atlanta where eight people were murdered, including six East Asian women. In the coming days, I read countless tweets and articles about American history, recalling institutional sanctions, detention, and militarized violence, alongside violent crimes committed by civilian Americans, against people who look like me.
Some facts were new to me--such as the Page Act of 1875, the first federal law that restricted immigration and that excluded Asian, mostly Chinese, women from immigrating to the U.S. Most of the pieces I've read over the past few months by Asian Americans are personal reflections. The overarching theme of many is that the concept of belonging, in an American context, can be elusive and fraught for Asian Americans.
There is another theme at work here, which are the notions of "the Asian American experience" or "the Asian immigrant experience." In the context of this series, the question would be: How can advisors better serve Asian American clients from the standpoint of the financial advice they need to meet their goals.
However, that question is based on the flawed premise that there is a single Asian American experience to address. There are commonalities in the experiences that many of us have had, to be sure, but to treat Asian and Asian American cultures, histories, and needs as one would be a mistake.
For financial advisors and counselors, I hope this provides a deeper view of the diversity of experiences in the U.S. so you can better connect with your clients, colleagues, and communities. For Asian Americans who work in financial services, I hope these reflections resonate with you or inspire you to share your own experiences.
Last month, I was asked by a reporter to share my experiences with racism. I shared a short summary of the racist and sexual harassment I'd experienced growing up and some that I experienced as an adult. But how far back should I have gone in my response? I was the first person in my family to be born in the U.S and the first American citizen. I could have shared that my family immigrated to the U.S. as refugees after a war in Vietnam that ended in 1975. I could have mentioned my family's experience of living through war and the violence they experienced in Vietnam. The story of my life and what brought me and my family to the U.S. couldn't be told without understanding the intersectional impact of racism, classism, sexism, colorism, xenophobia, as well as militarism and imperialism. But my family's story over the past several decades only touches on the diversity of stories of Asian American people that goes back much further.
The term AAPI (Asian American and Pacific Islander) includes people whose ancestors originated from across Asia (East, South, Southeast) and the Pacific Islands, including countries such as China, Korea, Japan, India, Pakistan, Vietnam, Cambodia, Guam, and Samoa. "Asian American" was coined in the 1960s as a political strategy to unite Asian ethic groups under a movement fighting against not just anti-Asian racism but also racism and imperialism against all people of color.
Growing up, most of my Asian American classmates were, like me, the first in their families to be born in the U.S. That's why I still remember the first time I met a Chinese American classmate with multiple generations of family members born in the U.S. I was in college, and this stunned me. I never studied Asian American history before, so I was in my 20s when I learned that the earliest Asian immigrants to the U.S. were from the Philippines, in the 16th century. Asian immigration to the U.S. continued in waves throughout the 19th century, primarily with people coming to work on plantations, railroads, and mines, primarily from China, Japan, India, and the Philippines. Immigration in the mid- to late 20th century was driven predominantly by people fleeing the aftermath of wars in Korea, Vietnam, Cambodia, and Laos.
When the movie Crazy Rich Asians came out, I was excited to see strong East Asian representation in an American movie--and nervous about the film exacerbating the myth that Asian Americans are doing great economically as a whole. Aggregating economic data for Asian Americans as one group hides severe inequities. The reality is that the wealth gap between the poorest Asian Americans and the wealthiest Asian Americans is wider than the gap between any other racial group in the U.S.
In addition, income inequality in the U.S. is at its all-time worst, and according to Pew Research, between 1970 to 2016, income inequality increased most rapidly among Asian American groups. The top 10% of income earners earn 10.7 times as much as Asian Americans in the bottom 10% of income.
In America, wealth and income can dictate health outcomes, safety, and housing stability. Southeast Asian Americans, such as the Burmese, Hmong, Laotian, Vietnamese, and Cambodian communities, typically rank lowest among other Asian American groups in terms of income and wealth, and they are particularly vulnerable to poverty, detention, and deportation.
The stereotype that all Asian Americans earn high incomes and are wealthy and financially secure is not true. As a consequence, financial professionals should not assume that Asian American families have similar levels of assets and risk tolerances, or even the same priorities. There can also be wide generational differences in income and wealth within families, with younger generations supporting their parents or extended family living within or outside the U.S. Advisors who are prepared to work with multiple age groups can offer a lot of value to Asian American families seeking advice across generations.
I often hear that Asian Americans are doing great, so why can't other racial groups in the U.S. "step it up like them?" Financial literacy, educational attainment, and English proficiency, or lack thereof, are not the sole drivers of Asian American income and wealth gaps. It's easy and too simplistic to selectively highlight "economic success" stories of specific Asian American ethnic groups--such as the Chinese, Japanese, and Indian communities--to explain away the need for a social safety net that would support all Americans. This leads to my next point.
I've heard the myths my entire life that Asian American youth are good at school, at math in particular. Again, disaggregating the data shows a more complicated story. In 2016, the high school dropout rate among Asian Americans ranged from 0.7% to 29.7% for Korean and Burmese students, respectively. On average, the dropout rate was 4.5% for white students, 7.0% for Black students, 9.1% for Latino students, 6.9% for Pacific Islander students, and 11.0% for American Indian/Alaska Native students. Disaggregating these averages would shine a light on the complexity of statistics based on broad racial groups that do not consider factors such as class and inequitable access to social services.
I continue to hear the specious claims that Asian American cultural values support hard-working, disciplined, and financially responsible adults. Unfortunately, Asian Americans themselves can play into and proliferate these harmful stereotypes, too. I don't hear these generalizations as compliments. Labeling Asian Americans as a model racial group implies that there are unworthy groups. At its core, this is a political tool to distract from the systematic oppression of minority groups and a weak argument against overdue changes to our political, education, legal, and economic systems that overwhelmingly benefit the wealthy. The lie of Asian Americans as the "model minority" can exist only within a false racial hierarchy, grounded in anti-Black racism and white supremacism.
The rise in anti-Asian hate crimes during the pandemic lockdowns over the past year shows how conditional model minority status can be. It reminds me of the myth of personal responsibility--the idea that people experience poverty because they need to learn to budget, save, and focus on building financial literacy. The personal responsibility myth is often accepted even by people who experience, or have experienced, financial insecurity. Financial security is precarious for many Americans. Research has shown that at least 60% of Americans experience poverty at some point in their lives. A focus on individual actions ignores the societal and structural dynamics behind why so many experience financial difficulty in the first place. The model minority and personal responsibility myths both serve to maintain the status quo.
As advisors, it's important that we deeply understand our clients and their individual goals and concerns. It's impossible to provide generalizable and scalable financial advice for an Asian American audience because Asian American communities experience political, economic, education, and financial systems in starkly different ways. I say this not to minimize our roles or potential impact as financial advisors and counselors, but rather to challenge us, myself included, to envision and build new models of support that take into account the diversity of Asian America.
Phuong Luong, CFP, is an educator, financial planner, and investment strategist focused on economic justice and closing racial wealth divides. She is currently the investment strategist for Adasina Social Capital and the founder of Just Wealth, a virtual, solo, fee-only Registered Investment Advisor. She is also the online facilitator for the Boston University Financial Planning Program and a subject matter expert in ESG and regenerative investing. The views expressed in this article do not necessarily reflect the views of Morningstar.