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Financial Planning > Behavioral Finance

How Reps Can Best Help Gay Clients

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The Insured Retirement Institute says 40% of same-sex couples are motivated to make financial plans and 86% say they need help with some aspect of financial planning, according to a report the group published Tuesday — a real opportunity for financial advisors, experts say.

This research comes on the heels of a UBS study released last week that found lesbian, gay, bisexual and transgender (LGBT) investors are both more optimistic than other investors about the U.S. economy and their personal financial situation, though they also are more concerned about financial matters, including their ability to pay for long-term care, and worry about finding LGBT-friendly long-term care facilities.

More significant, though, is the area where advisors could stand to improve their relations with LGBT clients and prospects: 77% of the roughly 500 high-net-worth LGBT investors surveyed by UBS say they are satisfied with their advisors, but only 57% say their advisors are focused on LGBT clients and understand the financial challenges of same-sex couples.

“If you’re a financial advisor, you have to make sure you really understand the challenges faced by LGBT clients,” said Emily Pachuta, head of Investor Insights for UBS Wealth Management Americas, in an interview with ThinkAdvisor. “These investors do not expect advisors to be in the community but do expect them to understand the financial challenges of the community and how to solve them.”

The Same, But Different

“Those who identify themselves as part of the LGBT community want to be treated like any other client or couple,” said Laura Steckler, CFP, head of the Steckler Wealth Management Group in Coral Gables, Fla., and they anticipate a “high level of expertise.”  

“Part of that expectation is having a seasoned advisor who can address their unique needs,” since advisors have to tailor plans for clients and that includes understanding their particular family dynamics, explained the Raymond James (RJF) advisor, who says her practice include a “good number” of LGBT clients.

More than 30% of LGBT investors are concerned about their ability to pay for health care and support as they age versus 25% of other investors, the UBS research found. Plus, four of the top five financial concerns for LGBT investors were unique to their group: being able to find LGBT-friendly care facilities (31%), marriage equality (29%), having the right to make health care decisions for spouses/partners (29%), and ensuring assets passed to their spouse/partner at death (25%).

“It’s very important for advisors to really understand that LGBT investors have the same concerns as other investors,” explained Pachuta. “They also feel somewhat more strongly about certain financial issues and have additional concerns, which require financial planning, advice and informed conversations.”

Industry Focus

The financial services industry, known for its conservative culture, has made great strides in improving its image within the LGBT community, which is advantageous for advisors, says Todd Sears, founder of Out on the Street, an LGBT leadership and networking group.

“For number reasons, including the financial crisis, the industry has changed dramatically and done lots of reflection,” said Sears in an interview. “It’s been among the most visible industries, if not the most visible, promoting these civil rights.

He points out that 14 of Out on the Street’s 19 members signed a legal letter of support (or amicus brief) for the overturning of the Defense of Marriage Act (DOMA). They have “recognized the importance of business opportunities and how Wall Street can lead as a top employer” within the LGBT community, Sears said.

Recently, Sears said, Credit Suisse launched an LGBT Equality Portfolio, so investors can share their assets with companies that have a demonstrated track record of supporting LGBT employees.

While the industry, like others, still has a way to go, its activities on behalf of the LGBT community are unprecedented.  

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