Canada’s rapidly growing immigrant community is underserved by the wealth-management industry, various studies show, and firms and advisors are increasingly taking notice of this potentially lucrative market segment.

Newcomers are about half as likely as Canadian-born residents to look to the financial services industry for advice, according to a 2007 Statistics Canada study. It found that only 27% of newcomers had received advice from a financial advisor, compared with 53% of their Canadian-born counterparts.

This hefty gap in the market is partly due to language, cultural and settlement barriers, along with a lack of advice tailored to newcomers, according to a 2008 report by Social and Enterprise Development Innovations, a Toronto-based charity that promotes financial literacy and self-sufficiency among low-income Canadians.

According to the SEDI report, entitled Financial Literacy: Resources for Newcomers to Canada: “Financial institutions currently do not go far enough to respond to the needs of the newcomer market.”

But as new immigrants make up a growing proportion of Canada’s population growth, it’s becoming harder for wealth-management firms to ignore this major opportunity. “It’s a very significant market,” says Neil Taylor, vice president of marketing with Winnipeg-based Investors Group Inc. “I think every financial institution in any community has seen the evolving face of Canada and is looking for ways to be able to serve all Canadians.”

Part of the burgeoning market’s new appeal to the industry is its affluence. Many immigrants arrive in Canada with huge amounts of cash for the short-term and long-term needs that will arise as they build their new lives in Canada.

“These immigrant investors are investible asset-rich,” says Margaret Yang, financial advisor with Edward Jones in Mississauga, Ont. Almost half of her book of business is composed of Chinese-Canadian clients. Many of her immigrant clients have total investible assets in six and seven figures. “There’s a huge demand,” she adds, “for financial and investment advice for them.”

Immigrants’ needs for financial advice are wide-ranging. Like most Canadians, newcomers need advice on insurance, estate planning and investing for such goals as buying a house, their children’s education and retirement. But many newcomers also have unique needs, such as specialized tax planning involving foreign assets or because their credit history isn’t recognized in Canada. And beyond their personal financial planning needs, a high proportion of immigrants own businesses, which present a variety of other financial considerations.

“They really are in need of advice,” says Taylor.

As an added challenge, newcomers often arrive with little knowledge of the Canadian financial system, and thus require extra education throughout the financial planning process.

“It’s important for [immigrants] to learn about the financial context of Canada,” says Adam Fair, managing co-ordinator at the Canadian Centre for Financial Literacy, in Toronto, “because they might be coming from a circumstance that is very different.”

Despite these wide-ranging needs, however, StatsCan’s study suggests that many newcomers aren’t actively seeking financial advice. This has prompted some firms to redouble their efforts to reach out to the immigrant community.

“The private sector is starting to identify this group as one that… might need a little bit more support. But [the industry] is also identifying newcomers as valuable lifelong clients,” says Fair. “I’m starting to see a bit more of a direct approach by some of the financial institutions to try to get newcomers to come in and become clients.”@page_break@As part of the effort to tap into this market, some firms are training their advisors in working with different cultural groups. Toronto-based Bank of Nova Scotia, for instance, offers internal training programs focusing on cultural sensitivities and financial considerations pertaining to specific immigrant groups, according to Rania Llewellyn, Scotiabank’s former vice president of multicultural banking, who was recently appointed vice president and head of Canadian operations at Scotiabank subsidiary Roynat Capital.

These sessions educate advisors on such nuances as the investing preferences of different cultures. For example, Llewellyn points out, Chinese-Canadians are inclined to invest in interest-generating securities, whereas South Asian immigrants tend to invest in real estate more than in stocks and bonds.

“It’s very important,” Llewellyn says, “for our financial advisors to understand those nuances; to customize the message.”

Acknowledging that some newcomers prefer working with advisors who speak their native language and understand their culture, many firms are recruiting advisors from different cultural backgrounds. Advisors who are immigrants themselves are able to relate to newcomers as clients, Taylor says: “[These advisors] really understand the culture; they understand what money means in that culture.”

Yang, who immigrated to Canada from China 12 years ago, has found her cultural background and her ability to speak Mandarin extremely helpful in attracting and working with Chinese immigrant clients. “Although their everyday English is OK,” she says, “they still prefer to talk about serious matters — whether it’s legal or, in this case, financial — in their mother tongue.”

Offering multilingual educational and promotional resources is another strategy that some wealth-management firms use to reach out to immigrant communities. As part of Yang’s efforts to attract clients from the Chinese immigrant community, she has teamed up with other advisors of Chinese descent at Edward Jones to publish advertisements in local Chinese-language newspapers and to offer educational seminars targeted at this community — in both English and Mandarin.

Consultants at Investors Group, says Taylor, can have hand-out materials translated into any language that a client requires.

And at Scotiabank, advisors have access to a list of key banking terms in various languages, along with their English-language equivalents.

These efforts have been well received among immigrants, many of whom struggle to understand the Canadian financial system when a language barrier exists.Says Fair: “Getting good information and getting help in a language that they can understand — or even receiving materials in English but in a simplified, plain language context — would be useful for them.”

The big banks provide wealth-management firms with tough competition when it comes to serving the immigrant community. Through aggressive marketing campaigns and specialized banking packages for newcomers, the banks often secure these clients within the first few weeks of their arrival in Canada. Although wealth management isn’t typically a top priority when newcomers first arrive, it often comes up a few months after they’ve settled in Canada.

“It comes a bit later in the immigration stage,” says Camon Mak, director, client strategies, multicultural markets, with Toronto-based Royal Bank of Canada. “They may not want to talk about investments right now. But, certainly, in three to six to 12 months’ time, those needs will come up.” IE