It’s Pride Month and that’s a valid impetus for registered investment advisors to mull new strategies for better connecting with existing LGBTQ clients and initiating new business within that community.
Simple math highlights the allure of working with the LGBTQ community. As of last year, 5.6% of adults identify as LGBTQ and that percentage jumps to 15.9% for those born between 1997 and 2002, according to Morningstar. The most recent Gallup indicates 7.2% of adults in the U.S. identify as LGBTQ, more than double the rate reported in the first survey conducted in 2012.
Other data points confirm members of the LGBTQ community want more investing guidance and are yearning to build wealth and nest eggs. Those could be signs LGBT is a well-timed ETF and one advisors can discuss with clients.
Indeed, there are compelling bottom-line reasons for advisors when it comes to working with LGBTQ clients and garnering more new business from this group, but it’s like any other relationship: There are right and wrong ways to initiate and grow it. Here are some ideas to get and stay on the right track with LGBTQ clients.
Think Beyond Pride, Understand Specific Needs
It’s one thing to get excited about Pride Month, but there are 11 other months of the year. Like everyone else, LGBTQ clients know this and advisors potentially run more risks than they’ll reap rewards by making June the sole time they emphasize LGQBTQ clients.
“It’s easy to be an ally when the firm has rainbow-washed your logos or have your bank sponsor local Pride festivities. It’s less easy—but more meaningful—when you comment on and speak out against the financial and legal challenges faced by the LGBTQ+ community across all months of the year,” notes Sabrina Macpherson, director of product development, climate solutions, at Morningstar Sustainalytics.
Another important tip for advisors is to realize and understand that LGBTQ clients, broadly speaking, have some specific financial needs. For example, a couple in a same-sex marriage may want to have children, introducing the possibilities of adoption or surrogacy. Those are expensive options, confirming clients in those situations can benefit from the guidance of advisors.
“Family planning is a common goal; quality financial planning and advice can help. Other personal medical costs might be associated with gender transition or reassignment. The transgender community needs better access to information and resources for financial advice or planning for these often-staggering medical costs,” adds Morningstar’s Stephen Pham.
Do the Little Things
As is the case with all clients, sometimes the little things make big differences with members of the LGBTQ community. Obviously, those steps can take varying forms, but some are as simple as taking the time to get to know each client to better understand their specific set of circumstances.
Other ideas include more inclusive documents and be ready with investment ideas with an LGBTQ focus. Hint: Some exchange traded funds accomplish that objective.
“Expect different conversations as well as generational differences. For example, the older generation came of age at a time when there was no marriage equality and often keeps their finances separate,” concludes Morningstar.
Bottom line: Embrace the journey with LGBTQ clients and realize their needs are unique.