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Financial Planning > Behavioral Finance

LGBTQs Are an Ideal Client Base for Advisors: T. Rowe Price

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With June being Pride Month, T. Rowe Price released a report called The Equality Economy that looks inside the changing lives of LGBTQ investors and examines how advisors can best help them.

ThinkAdvisor spoke with the author of the report, Paul Zettl, who is head of product and offer management and chair of PRIDE at T. Rowe Price.

“The LGBTQ community is really the ideal client base for advisors,” Zettl explained. “This community is large. It’s growing. It has money. And because of their self-reliance, they’re already making more money, they’re investing that money. And they’re completely open to advice, yet they feel underserved.”

According to Zettl, the LGBTQ community is “really worth paying attention to” for advisors.

The LGBTQ community in the U.S. has grown each year since 2012, currently representing 4.1% of the population with estimated buying power of $917 billion, according to the report.

This community is expected to grow even more as changing attitudes and laws allow individuals to live more authentic lives. As an example, the report states that 20% of millennials currently identify themselves as LGBTQ compared with 7% of boomers.

“Advisors, we believe, need to pay attention to this segment and need to pay attention to the next generation,” Zettl said. “The LGBTQ community and the next generations are inextricably linked.”

To better understand the financial behaviors of these investors, T. Rowe Price conducted primary research through Community Marketing & Insights (CMI). The research consisted of an online survey of 1,300 LGBTQ adults. Specifically, they surveyed individuals over 21 with investable assets over $25,000. The survey also took a focused look at affluent individuals (AIs) with more than $500,000 in investable assets.

The report addresses three specific themes about LGBTQ investors that came through in the study.

1. The LGBTQ community is full of self-reliant investors.

“The median age of participants is 51, which means they grew up in an era when marriage equality and same-sex benefits were not universal,” the report says. “Culturally, this created a population with a mindset that they have to look out for themselves when it comes to planning for long-term financial security.”

The research shows that 80% of LGBTQ adults are actively investing assets to provide for long-term needs. For affluent individuals, that percentage goes up to 95%.

2. Along with self-reliance, LGBTQ investors place a high value on the advice of experts.

More than half (54%) currently work with an advisor, according to the survey. Zettl notes that this is more than the general population.

The survey also finds that 47% use social media to seek out different perspectives to inform financial decisions. While they are willing to listen and learn from the experts, 71% ultimately want to make investment decisions for themselves.

3. LGBTQ  investors feel underserved.

Despite their willingness to work with financial professionals, the survey finds low affinity for the financial services industry.

The survey also finds that this group has a strong preference to work with a firm that is known to be supportive of the LGBTQ community, but fewer than 10% could identify any investment firm as particularly LGBTQ-friendly.

“The LGBTQ community does not require their advisor to be a member of the LGBTQ community,” Zettl said. “What they require though is that the advisor is supportive of the community.”

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