Over recent years there have been significant developments for the LGBT+ community, with anti-discrimination, marriage equality and workplace inclusion among the positive developments.
Consequently, it would be easy to think ‘job well done’.
But the LGBT+ consumer segment merits further consideration, writes Paul Thompson, LGBT Capital founder and chairman of Equality Wealth.
Shadows of the past
The LGBT+ community is estimated to represent an annual global spending power of around $3.5trn (£2.8trn, €3.1trn), and an estimated $16trn in wealth according to research from LGBT Capital.
While it is indeed true that there have been a lot of positive developments over the last 20 years, many in the LGBT+ community have lived through some very different times, which will have had a lasting impact on their finances.
It was just over 50 years ago that being gay was not even legal, let alone accepted by society.
As such, most felt the need to hide their sexuality and many still do today, particularly among the older generations.
The LGBT+ community was also hit particularly hard by the Aids/HIV crisis in the 1980s and 90s.
These significant issues meant that many people could not plan properly for their financial future.
It’s hard to protect a partner whose existence you hide, and it’s difficult to plan for retirement when you can’t imagine being able to live an open life.
Many didn’t even know whether they’d live into retirement.
Higher cost of living
Civil partnership, which provides most of the benefits of marriage, was introduced in the UK in 2004. This led to full equal marriage five years ago.
While it is an amazing development, most LGBT+ couples are still not legally partnered or protected.
There are a number of reasons for this.
Many still remain ‘in the closet’ due to family or societal pressure and many older LGBTs still feel less comfortable being ‘out’.
Younger LGBTs have a generational difference but can still have unique issues.
Many are still not ‘open’ about their sexuality or partner – and, with less likelihood of having children, may face a different life plan and be less likely to think about financial planning early enough.
One other significant decision facing the LGBT+ community is where they would like to live/retire.
When we launched Equality Wealth, we surveyed where people would like to live.
In general, people would like to live in or near a vibrant LGBT+ community and those areas tend to be relatively more expensive. Our analysis of the survey results implied a roughly 20% premium for the desired locations.
Based on these issues, here are some general considerations for dealing with the LGBT+ community and financial planning.
They fall in two categories, the first being issues based on life experience and the second specific financial/legal considerations.
Life experience issues
We find that particularly older LGBTs may hesitate in ‘coming out’. People will very often respond well to dealing with someone who understands the journey they’ve been on.
Like everyone, we want respect. Respect means understanding our issues and not just assuming we have a wife or husband and 2.2 kids.
Terminology is important. How we address people and talk about their partner/spouse etc.
Specific financial planning issues
Retirement. This is a huge issue for many in the LGBT+ community. Due to the issues mentioned above, this may well not have been considered in the same way and it is important to understand the history and aspirations, especially as these may involve a more expensive location.
Partner protection. With only around 5% of LGBTs being in a formal partnership, partner protection is a key issue. Some couples have still not told their families or their employers and their finances many be separate. Partners may not be listed as next of kin or beneficiaries where we would expect.
Civil partnership/marriage. Even with the protection of a formal partnership, there are some unique issues. One example is that of where even if an LGBT+ couple is married in the UK, most countries still don’t accept same-sex marriage and so, when travelling or relocating, there are unique issues requiring pre-planning.
Children. With more LGBTs planning on having children, there are some unique issues. This may involve very significant expense if surrogacy is involved – and again – pre-planning is required.
LGBT+ people have faced discrimination over many years – and still do. As such, we value companies and advisers who truly respect and understand our particular requirements.
This article was written for International Adviser by Paul Thompson, founder of LGBT Capital and chairman of Equality Wealth.