LGBT community has money but needs advice

NEW YORK (Reuters) - How well do financial planning firms respond to the needs of the LGBT community? The report card just came in. They flunked.

Partners Bill Wilson (R) and Fernando Orlandi walk inside San Francisco City Hall as they prepare to get married on the first full day of legal same-sex marriage in California June 17, 2008. REUTERS/Erin Siegal

Financial giant Prudential Financial Inc today released an online survey of more than 1,400 Americans who identify as lesbian, gay, bisexual or transgender. For institutions hoping to tap into this lucrative market, the numbers are a serious wake-up call.

Asked to rank the industry’s attention to their financial needs - 0 being poor, 10 being excellent - 63 percent of respondents gave financial institutions an anemic score of four or less. And looking ahead over the next two years, 47 percent expect this performance to remain just as dismal.

It’s a missed opportunity for the industry, since members of the LGBT community are generally in robust financial shape, according to the Prudential findings. They have a higher median household income than does the general population, $61,500 compared with $50,000, and tend to have more discretionary income.

“We found that nine out of 10 LGBT individuals have never even been approached by an adviser who offered guidance or planning for their specific needs,” says Michele Meyer-Shipp, vice president and chief diversity officer for Prudential Financial. “It’s a very complicated space, and there’s often a lack of awareness from financial advisers and institutions.”

LGBT Americans have the same core financial concerns as everyone else. They worry about retirement savings, don’t have a whole lot of confidence in their preparedness and they don’t want to outlive their cash.

But they have additional particular concerns: how taxes for same-sex couples are treated and how Social Security and pension benefits accrue (or don’t) for surviving partners. There is room here for financial companies to address the retirement planning needs of aging gay couples, and they do not all seem to be filling that space.

Those concerns are why Georges Sylvestre has been getting his financial house in order. A vice chair of OB/GYN at New York City’s Jamaica Hospital, Sylvestre and his partner, David, are working through a thicket of tricky issues - including setting up an estate plan if one of them passes, and ensuring that their 2-year-old son, Tristan, will always be provided for.

It’s very specific and complicated, and that’s why Sylvestre went to someone who knows what he’s talking about: A financial planner who is gay.

“We’ve had a good experience with financial planning so far, because we chose someone from our own community,” says Sylvestre, 44. “Since he deals with so many gay couples, he knows all about the issues involved.”

But if some planners are behind the curve on LGBT issues, it’s not necessarily because they’re willfully ignorant. It’s because laws regarding LGBT finances are very much a patchwork - often varying state by state, and frequently changing. Keeping on top of such a mountain of complex information is a challenge for even the smartest and most engaged financial adviser.

“Oh my God, there are so many issues,” says Stephanie Lee, a planner with East Rock Financial Services in San Francisco who helps some clients handle these matters.

“You have to talk about benefits for surviving partners, about tax treatment for regular marriages or domestic partners, about health directives. You have to talk about divorce, and wills, and estate-tax exemptions. And some of this changes with every state. It’s a lot of information, and it can get very tricky,” Lee says.

That would explain one of the survey’s key findings: That barely 25 percent of LGBT individuals think their financial planning needs are similar to those of the population at large. For planners who are used to ticking off one-size-fits-all boxes, like retirement savings or emergency funds, that figure might be unsettling.

“These are areas where advisers still need to get skilled up,” says Prudential’s Meyer-Shipp. “Here are the needs, here’s where LGBT clients need help, let’s get started. Before, that kind of dialogue wasn’t even happening.”

There has been some improvement. Pam Simpson, a teacher from Cortlandt Manor, New York and one of Lee’s clients, remembers that seven years ago when she and her long-time partner, Janet Gillespie, were refinancing their New Hampshire vacation home. It took a while to get the lender to even understand that they weren’t simply business partners.

“It threw them for a loop,” says Simpson. But they did get the loan.

(The writer is a Reuters contributor. The opinions expressed are his own.)

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