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What advisors need to know about working with LGBT clients

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Planners take notice: the LGBT community could use your services.

Less than one-third of lesbian, gay, bisexual or transsexual individuals surveyed by Prudential Financial say they work with a financial advisor, and a majority says they lack basic knowledge about financial planning.

A lack of financial knowledge or the ability to gain required financial knowledge were top concerns of the LGBT survey respondents.

LGBT individuals also feel much less confident tackling important financial goals compared to the general population, are less comfortable managing an investment portfolio on their own, and are more likely to see themselves as spenders rather than savers, according to the new Prudential Financial study.


Less than one-fifth of LGBT respondents say they are well prepared to make wise decisions to save enough for a lifetime, for example, compared with 28% for the general population.

“This isn’t going to be a case of jumping to estate planning as the first conversation," said Kent Sluyter, CEO of individual life insurance for Prudential Advisors, speaking at the LGBT Community Center in New York, which hosted the release of the report. "It's really kind of helping people with fundamental issues around investment planning and dealing with problems like debt.”

Compared with the general population, LGBT individuals are investing less to prepare for the long term, according to the report. Less than 20% of LGBT respondents have retirement accounts, life insurance or a will or estate plan. The majority of their earnings end up in savings accounts or employer-sponsored retirement plans, options that do not require much planning or complex decision-making.


The study's findings were amplified for millennials and Gen X respondents, which make up a significantly larger portion of the LGBT community compared to the population as a whole. According to the study, close to 6 in 10 LGBT respondents in those generations do not know what, when or where to buy and sell.

According to the study, LGBTs would like to ask financial advisors what options are available; what they should consider when evaluating options and how they can get started.

“In many ways the financial challenges are the same, but they are also different. [LGBTs] have to think about basics first and things that straight couples take for granted,” said Glennda Testone, executive director of The LGBT Community Center.

Speakers also emphasized that ensuring the financial stability of LGBT clients is one of the key ways advisors can support the community in light of the recent tragedy in Orlando. “We are all recovering from the shock of that event,” said Testone, “and knowing that your finances are secure is always a huge help.”


When they do decide to pursue professional help, selecting an advisory firm that is socially conscious is a top priority for LGBT individuals. The study shows that half of respondents are much more likely to work with a company that supports equal job rights for LGBT employees, gender equality and LGBT employee benefit equality. This compares with around 20% for the general population.

Sluyter’s advice for planners who may be new to servicing this market segment is to be conscious of existing portfolios and how they need to be adjusted to fit the current environment.

“I think advisors really need to recognize that there’s a tremendous value add to help these individuals get on the right track" Sluyter said. "It’s not exactly about seeking results for today, but opening the door to future opportunities.”

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