The Trillion Dollar LGBT Community and A Need for Inclusive Financial Planning

By: Robert Castillo, ADPA®
Founder of GK LGBT Group

It’s time for financial planners to stop ignoring the trillion-dollar purchasing power of the LGBT community in the US. As of 2018, the disposable personal income of LGBT people in the nation was $987B; and when you add the production of LGBT-owned businesses, our community is contributing $1.7T to the US economy. With such a large footprint in the nation’s GDP, it’s astounding to learn that only half of LGBT adults are turning to financial advisors for guidance. The reason is obvious, very few wealth management firms are targeting the LGBT community and our unique financial needs. LGBT people want to work with companies that support us and very few can identify a financial planning firm that is LGBT friendly. Fortunately, Gerber Kawasaki Wealth & Investment Management is devoted to diversity and inclusion to the point that we’ve launched the GK LGBT Group to meet the needs of our community—we’re even having a Pride party this month to celebrate!

The LGBT community in the US is growing both in numbers and economic power, according to recent studies by Gallup and Witeck Communications. The future is looking very gay when we see that millennials are increasingly identifying as LGBT, 8.1% in 2018 up from 5.2% in 2012 (Gallup). What’s even more impressive is the rapid growth in purchasing power of LGBT people from $917B in 2015 to $987B in 2018, with the potential to grow by millions more in the next few years according to Witeck Communications. When we combine that with the $1.4M contributed by LGBT-owned businesses, we’re looking at what would be the world’s tenth largest economy, according to NGLCC, the National LGBT Chamber of Commerce. There’s no doubt that my community’s growth in population and wealth will be massive over the next few years, especially since an overwhelming majority are investing for the long term. A survey conducted by Community Marketing and Insights (CMI) indicated that 80% of LGBT people who are 21 and older with assets over $25,000 are actively investing for retirement. There’s no doubt that my community’s future growth in population and wealth is massive—so why are only half of us seeking guidance from advisors when it comes to making financial decisions? When asked in the survey conducted by CMI, less than 10% of LGBT people could identify any investment firm as being particularly LGBT friendly, yet 94% of them felt it important that their firm develops some expertise in LGBT specific needs.

With an ongoing history of dealing with discrimination, it wasn’t surprising that the CMI survey found that LGBT people trust financial planners less than straight people. The survey also found that half of the community prefers to work with a financial advisor who identifies as LGBT themselves and 95% of us prefer firms that have LGBT-supportive personnel policies. The reality is that until the Equality Act is in full effect, LGBT people will be vulnerable to discrimination in employment, housing, and credit among other areas. The UCLA Williams Institute indicated in a study that 60% of LGB people reported being fired from a job or denied a job versus 40% of straight people with the same qualifications. The study also indicated that 48% of LGB people were denied a promotion or received a negative evaluation versus 32% of their straight colleagues. In a separate Iowa State University study published by the Proceedings of the National Academy of Sciences, the research found that same-sex partners were 73% more likely to be denied a mortgage loan than male-female couples with the same financial profile. When approved for a loan, same-sex couples paid an average of 0.2% more in financing fees which resulted in as much as $86M in extra annual fees for the LGB community. As these studies become available, the LGBT community remains rightfully wary of discrimination when dealing with service providers like financial planners.

I have personally devoted my financial planning practice to helping my community because I know firsthand how ostracizing it can feel to be discriminated against. I know what it’s like to go back “in the closet” at a job out of fear of feeling excluded. That’s exactly what I did when I joined Gerber Kawasaki in 2009 and when I finally decided to “come out” in 2012, I was surprised by the amount of support I received. I was encouraged by my firm to earn my ADPA® designation which equipped me with the knowledge to help same-sex couples navigate the financial repercussions of marriage and domestic partnerships. I was motivated to launch the GK LGBT Group to form a group of financial planners who would be devoted to learning about LGBT specific needs. This year we are celebrating Pride for the first time with our clients and friends and we couldn’t be more excited. We know that not everyone is lucky enough to have a supporting environment, so we do our part in welcoming clients from all walks of life. Happy Pride!

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Investment advice offered through Gerber Kawasaki Inc, a registered investment advisor. Gerber Kawasaki and Gerber Kawasaki Wealth and Investment Management are separate entities from LPL Financial.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which course of action may be appropriate for you, consult your financial advisor. No strategy assures the success or protects against loss.

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