As we move towards the conclusion of Pride Month, it’s clear that the wealth management industry is much more aware than ever that LGBT clients have distinct needs – And that there are growth opportunities for firms and advisors that can effectively meet those needs.
The problem, however, is that many firms and their financial advisors continue to be unclear about exactly how to go about serving this client segment.
Industry Sentiments
In this month’s WSR survey of registered readers who are financial advisors about wealth management and LGBT client support, 67% of the participants strongly agreed that LGBT clients need unique planning and solutions.
At the same time, 63% of survey participants agreed that they needed further clarity and guidance on what specifically LGBT clients need in terms of service that would be meaningfully different from non-LGBT clients.
Additionally, a whopping 71% of survey respondents strongly agreed that the wealth management industry needs to bring aboard more financial advisors from an LGBT background, as they are best positioned to understand the needs of LGBT clients and communities.
Nina Rose, CFP, a Relationship Manager with Coldstream Wealth Management, an RIA firm in Seattle with over $4 billion client assets, emphasizes that “a lack of representation is a significant reason that the LGBT community remains underserved by the wealth management industry.”
“More LGBT advisors and other critical stakeholders to the financial planning process will help.”
Going Beyond Dialogue
In the views of financial advisors who have more experience in supporting the needs of LGBT clients, greater LGBT industry representation is just one of many necessary fixes. In many instances, the issues are much more systemic.
As just one of many examples, the assumptions that financial products are based on frequently do not align with the needs of LGBT clients.
According to Rose, the wealth management industry should advocate more with financial product sponsors for investment solutions that “address needs outside of heteronormative expectations.”
Rose notes, “We still see life insurance products that explicitly require a husband and wife to be covered rather than spouses or partners. As an industry, we need to bring diverse professionals into the business in greater numbers and use our collective strength as gatekeepers to sway product sponsors to provide more inclusive offerings.”
Committing Real Resources
What else can wealth management firms do? Los Angeles-based Gerber Kawasaki Wealth & Investment Management, with over $2 billion in assets, has leveraged its early start in focusing on growth in LGBT communities to develop an array of solutions specifically designed to support this client segment.
According to Robert Castillo, CFP, a financial advisor at Gerber Kawasaki who is also an Accredited Domestic Partnership Advisor, “We created a dedicated LGBT+ Investment Group led by a team of advisors who have specialized credentials in domestic partnerships, estate planning, and other areas essential to the financial needs of the community.”
While Gerber Kawasaki may have been one of the first wealth management firms to launch such resources, other firms are following suit.
According to WSR’s LGBT-related survey:
- 53% of financial advisors are “actively exploring” how to launch specific resources and services for LGBT clients
- 78% of these financial advisors are doing so because younger members of client families are requesting more LGBT-specific services, or simply asking whether the financial advisor’s business is LGBT-friendly
- 62% of these financial advisors see opportunities in rolling out estate planning and insurance planning that addresses the gaps that exist across states in how marriage, civil unions and the adoption of children by LGBT families are recognized
Caveat Emptor
Perhaps even more so than usual, the message – and its authenticity – are of critical importance for wealth management firms and their financial advisors who are seeking to grow their business with LGBT clients.
In Castillo’s opinion, “Members of the LGBT community know when they are being commodified or patronized. They’re going to be justifiably skeptical of slick ally marketing campaigns alone.”
“You need to actively participate in organizations and causes that confront critical issues in the community, like the rash of homelessness among LGBT+ teens and the constant violence against transgender people.
For instance, Castillo notes that Gerber Kawasaki’s financial advisors volunteer for door-knocking campaigns to educate voters about the community and support legislative leadership that will affect positive change for LGBT+ people.
“The community is incredibly loyal. If you make a genuine effort to understand and connect, it will pay you back in spades.”
James Miller, Contributing Editor & Research Analyst, can be reached via email at ContributingEd@wealthsolutionsreport.com
