In the run up to the 50th commemoration of Boston Pride this month, the CFA Society Boston recently hosted a webinar on the Equality Economy, featuring a look at the LGBTQ investor community and its needs from advisors. Market researcher Jean Dunn shared proprietary work she has conducted for T. Rowe Price. She offered some key insights from surveying some 1300 LGBTQ investors on the unique character of this community and how advisors might reach them. Among her conclusions:
- The LGBTQ community is small but growing and its values influence a much larger base of investors
- LGBTQ investors are independent and self-reliant but open to advice
- They feel underserved by financial service providers
- They want to see advisor support for the LGBTQ community and its values
- The bar is low to gain that support—show up, listen, and demonstrate you are an ally
Why focus on the “Equality Economy”?
According to Dunn and her research, while roughly 4% of the greater metro Boston population self identifies as LGBTQ, there is a much larger segment that supports LGBTQ causes. She calls this the Equality Economy, one with special resonance among and involvement by younger generations. A few of her numbers:
- 20%--millennials that ID as LGBTQ
- 35%--Gen Z (ages 13-20) that ID as bisexual/fluid in sexual orientation
- 64%--Adults identifying as LBGTQ allies who say they more likely to spend $ on LGBTQ-inclusive brands.
Dunn also noted that over 1.4 million business owners identify as LGBTQ, controlling revenues of $1.7 trillion.
Independent but open to taking advice
Dunn’s research also revealed that as a group, the LGBTQ community tends to be independent and self-reliant, putting retirement security and financial self-reliance among top investing motivators. They are, however, inclined to seek professional advice. Some 95% of the affluent LGBTQ investors use a financial advisor and 38% delegate investment decisions. Although they use advisors, they are also overwhelmingly unsure over whether financial services companies are supportive and LGBTQ-friendly.
Knowing that advisors support LGBTQ values is key to winning them as clients. This community wants to work with allies. Dunn’s surveys show a significant majority of LGBTQ investors emphasize two key factors as important to choosing an advisor:
- works for a company known to be supportive of LGBTQ community
- has other LGBTQ client experience
Interestingly, whether or not an advisor actually identifies as a member of the community itself is much less important a factor.
This need to see demonstrated support and/or prior experience with LGBTQ clients highlights how particularly important referrals are in gaining new clients. According to Dunn, the task of demonstrating that support is something of an easy lift.
How to show support and gain trust—the bar is low
The single most important criteria to demonstrating commitment to the LGBTQ community turned out to be a negative. Some 75% of respondents to Dunn’s survey said it was very important that firms NOT donate to anti-LGBTQ political candidates. The next most important factors were having LGBTQ-supportive personnel policies and developing special knowledge about LGBTQ financial concerns. Direct financial support for LGBTQ causes through donations or sponsoring events was much less important.
On a practical basis, Dunn suggested advisors can show support and gain the LGBTQ community’s trust simply by “showing up”. First learn about the community’s values and then look for ways to reach out to local LGBTQ groups or their allies. As basic first steps, she recommended advisors:
- Identify current LGBTQ clients or contacts
- Research companies that have LGBTQ-focused employee resource groups or are LGBTQ-focused groups themselves
- Look for other local places apt to have LBGTQ support groups such as hospitals, colleges, and universities.
- Offer to meet with these contacts or groups to make connections and provide educational advice
Dunn detailed some more specific advice on making presentations and approaching conversations. Investment advice isn’t gender or orientation specific but there are unique financial aspects to LBGTQ lives and how you talk about them. In the current environment, Dunn notes clients are especially focused on making sure they are providing for heirs or others’ financial needs—emphasizing estate planning basics, i.e. wills, Power of Attorney, access to medical records, etc. She also mentioned things as specific as paying attention to pronouns (he/she/they, etc.)—preferences are an important part of members’ identity both when addressing individuals and when drafting financial documents.
Given the LGBTQ community’s emphasis on values, there is also significant overlap with ESG investing, which can also be a venue to reaching potential clients here.
According to Dunn, the overall goal is to overtly identify yourself as a member of the community or as an ally. To help with that mission, she provided access to a range of resources from T. Rowe Price, including more sources of potential local groups, templates for conversations, a model financial presentation, and a detailed white paper covering her research. All of these can be accessed via the information found in the YouTube recording of this event. Link:
https://www.youtube.com/watch?v=BqCTwIWq4tk&t=4s
For those interested in learning more about how to serve this unique community, the presentation and associated resources are well worth checking out—particularly given its timeliness with Pride month and the Supreme Court’s ground breaking LGBTQ rights ruling just handed down on June 15.
Image by gagnonm1993 from Pixabay