Insurance agents and financial planners would do well to work to meet the financial demands of the lesbian, gay, bisexual and transgender community, which typically has a higher median income than the general population but overwhelmingly rates their experience in the U.S. financial industry as poor. In fact, a recent Prudential survey found that 63 percent of LGBT Americans give the industry’s attention to their community a poor rating.
While they may have more financial resources than the general population, the LGBT community is going through some remarkable societal changes. With the repeal of the Defense of Marriage Act in June 2013, LGBT couples are now free to marry, which means they’ll likely have different financial goals and needs than before, when they could only enter into a civil union with their partner. Respondents to the Prudential poll, however, reported being unsure of their financial future, as 29 percent reported being less confident in their ability to adequately prepare their financial futures, compared to 14 percent of the general population.
Tax and family laws for LGBT couples are very intricate, Prudential reported, so insurance agents and financial planners should familiarize themselves with various areas of the laws to ensure they best meet clients’ needs, no matter if they’re a gay male from the Generation X demographic or a lesbian baby boomer – everyone has unique concerns based on their own experiences.
“Until we achieve total financial equity in taxes, employment, etc., we need advisors who can help create air-tight financial plans for our families,” a gay male respondent from Vermont said.
More, unique needs
While the best method to deal with LGBT financial issues may vary from person to person and couple to couple, their concerns generally are similar to those of the general population. In fact, retirement, family protection and caring for an elder are some other concerns that insurance agents and financial planners should keep in mind with dealing with LGBT clients.
Saving for retirement is a huge concern because many same-sex couples around the country are just now able to marry their partners. Since they are only recently married – or engaged – many couples have just now started saving, with about 14 percent responding that they are actively saving for retirement.
As about 23 percent of lesbians and 7 percent of gay men have children with their partners, financial professionals need to address those needs with clients. Legal and financial protection are key when having children, and many couples likely will want to establish college funds for them.
About 10 percent of respondents in the Prudential survey said they are caring for a parent or elder – a number that likely will continue to grow as thousands of baby boomers reach retirement age every day. Some may not have proper financial protection themselves and instead rely on a lesbian, gay, bisexual or transgender loved one to take care of financial responsibilities.
“Right now, we’re planning to have a child, so our financial goal is to save up a ‘nest egg’ to help ease the financial burden of getting pregnant, hospital costs, second-parent adoption and other costs associated with having a child,” an LGBT community member said in her response to the survey.