How to live up to your LGBT marketing

Fri Jun 28, 2013 9:10am EDT

A gay couple holds hands during a rally in support of the United States Supreme Court decision on marriage rights in San Diego, California June 26, 2013. REUTERS/Mike Blake

A gay couple holds hands during a rally in support of the United States Supreme Court decision on marriage rights in San Diego, California June 26, 2013.

Credit: Reuters/Mike Blake

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(Reuters) - Gays and lesbians may not yet have full marriage equality in every state, but in the eyes of the wealth management industry, their money is as good as anyone's.

Same-sex couples now walk hand-in-hand on the covers of marketing brochures from brand-name firms that have taken aim at this demographic in recent years. Wealth management firms like Merrill Lynch Wealth Management, Morgan Stanley Wealth Management, UBS Wealth Management Americas and Wells Fargo Advisors also offer financial planning seminars aimed at the gay and lesbian communities.

That is a long way from just a few years ago, when firms and their clients often steered clear of any discussion of sexual orientation, even when it had an important bearing of the financial life of a lesbian, gay, bisexual or transgender (LGBT) client. Without an opening comment from an adviser, the client often had to worry about how their status would be received.

But now, as firms target LGBT clients, there's a new challenge for advisers: managing finances for couples whose legal status is complicated and uncertain. Not all will be able to live up to their firm's advertising.

"There are some people at these firms who have no idea what they're doing because they're hopping on the we-want-the-gay-dollars bandwagon," said Scott Squillace, principal and founder of the Boston-based law firm Squillace & Associates, which focuses on LGBT clients. He notes, however, that "there are terrific people at some of these firms doing terrific work."

Wednesday's historic Supreme Court ruling striking down the Defense of Marriage Act created a great planning need: some same-sex married couples will be able to merge their finances, but others will not. Federal and state laws clash and some implications will have to be clarified by further regulation - or more court cases.

An adviser who is ignorant of the issues involved can put the clients' financial lives in jeopardy - causing tax or cash flow problems by improperly titling an asset, for example. Even if they avoid calamity, improperly trained advisers may leave clients thinking their firm made false promises.

Therefore advisers should call themselves LGBT planning experts only if they really are. That often requires years of experience in health-care, retirement and estate planning. They should also stay abreast of adoption laws and the ongoing LGBT-related litigation moving through the courts.

"Clients don't want us to be learning along with them at the table," said John McGowan, head of the LGBT and non-traditional family practice at Northern Trust Corp..


The LGBT-orientated practices at many big wealth management firms have evolved in similar ways: financial advisers who have trouble answering questions from gay clients push their firms for resources. The firms tap gay employees to create an ongoing outreach and training program.

They are making good progress. New client forms at UBS Wealth Management Americas, a division of UBS AG, now ask for "Client 1" and "Client 2" instead of "husband" and "wife". And UBS, Morgan Stanley and Merrill Lynch, a division of Bank of America Corp., now have financial planning software adaptable to the needs of same-sex couples.

But gay people are still a long way from being able to walk into the local office of a big wealth management firm and find an LGBT planning expert.


Squillace, the estate lawyer, said he recommends that his LGBT clients look at the wealth adviser's credentials first.

He tells them to look for an Accredited Domestic Partnership Advisor mark, a designation offered by the College for Financial Planning that trains advisers in topics like methods of transferring wealth and creating domestic partnership agreements. Only 215 people in the United States currently hold that designation, the college says.

Advisers who want to specialize in this space should get to know the local estate lawyers, accountants and insurance experts who focus on LGBT issues, join local LGBT networking groups and attend workshops, suggests Joshua Hatfield Charles, a spokesperson for the Certified Financial Planner Board of Standards on issues related to LGBT planning.

The LGBT community has a higher median income compared to the general population, likely due to education levels and a tendency to live in states with higher median incomes, according to a 2012 study by Prudential Financial Inc.

There are roughly 9 million to 11 million adult LGBT Americans, the San Francisco-based research firm Community Marketing Inc estimates.

Northern Trust says it saw revenue in its LGBT practice increase by 19 percent in 2012 compared to a year earlier. The firm, whose assets under management for the overall wealth management division are about $206 billion, declined to give the total amount of assets managed by the LGBT practice.

There may come a time when there is no need for this kind of planning because LGBT Americans have exactly the same rights as straight individuals. Until that happens, specialization pays.

(Reporting By Jennifer Hoyt Cummings; editing by Linda Stern and Leslie Gevirtz)

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