Planning's New Demographics

Advising LGBT Americans Requires Informed Engagement

Industry is learning to reach out and meet clients ‘where they are’

by Kent Sluyter

Mr. Sluyter is chief executive officer of Prudential Individual Life Insurance and Prudential Advisors. Visit

The one-year anniversary of Obergefell vs. Hodges, the landmark United States Supreme Court case in which the court guaranteed the right to marry for same-sex couples in all 50 states, provided an opportunity to reflect on the evolving opportunities and financial landscape of the Lesbian, Gay, Bisexual and Transgender (LGBT) community.

While the right to marry simplified the financial lives of LGBT Americans, unique financial concerns remain, and there is still work to do to protect basic rights.

Prudential Financial published the 2016/2017 LGBT Financial Experience in June 2016 in an effort to reveal a clearer picture of the financial needs and concerns among LGBT Americans. The report builds off a report Prudential launched in 2012, which explored the financial hopes and concerns of LGBT Americans.

For financial services companies and individual advisors, it is more important than ever to meet clients where they are. It is not only essential to be an ally of the LGBT community, but it’s also critical to recognize their unique financial circumstances, and understand their evolving legal rights.

More Millennials, Fewer Boomers

Part of what makes the financial situation of LGBT Americans unique is the individuals and families that define this community. At the moment, the LGBT population has significantly more Millennials and fewer Boomers than the general population; in fact, LGBT respondents are five years younger, on average, than the general population.

In some ways, this age gap helps to explain the differences between the financial health and preparedness of the LGBT population and the general population. Furthermore, the LGBT community is represented in each region of the U.S. at rates equivalent to the general population, and living in every state and every type of community – from rural areas to big urban centers.

LGBT individuals are more likely to live in states with legal LGBT protections, which could explain why some respondents are concerned about issues like wage inequality and workplace security.

Lastly, the nature of LGBT households continues to evolve alongside legal changes. The rate of marriage has more than tripled in the past four years: 8% of LGBT respondents were married in 2012, compared to 30% in 2016.

The hope is that the financial services industry will be better suited to help the LGBT community attain financial security with these insights in mind.

Financial Goals: Transition from Spending to Saving

Like other Americans, many LGBT individuals are concerned about their ability to save for retirement. In fact, seven in 10 agree that being financially independent, with enough savings to last a lifetime, is very important and a top financial goal regardless of gender, generation and sexual orientation.

Despite the apparent prioritization placed on saving for the future, LGBT respondents are more likely to consider themselves “spenders.” Current spending patterns re-affirm this claim and suggest that LGBT do, in fact, spend more and save less compared to the general population.

Regardless of sexual orientation, Americans share ideals for how they would like to allocate their income, spend less and save more. For LGBT, the ability to achieve these goals will hinge on finding ways to spend less. Financial professionals can help LGBT clients establish a budget in order minimize spending and maximize both short-term and long-term savings.

Education as Stepping Stone to Plan Ahead

Despite the fact that the financial situation for the LGBT population has remained stable over the past four years, the percentage taking the necessary steps to prepare for their financial future has diminished.

Fewer LGBT respondents in 2016 (compared to 2012) have started saving or investing for retirement; have insurance; or have a will or an estate plan. Furthermore, LGBT respondents are less likely than their non-LGBT counterparts to have purchased these products or outlined their plans and priorities.

One way to explain the lack of forward-looking planning and purchasing of financial products to secure lifetime income among the LGBT community is by examining the confidence levels around personal finance topics. The LGBT community overwhelmingly feels that they need more information and experience in order to tackle their financial goals. Compared to the general population, LGBT individuals also feel less comfortable managing an investment portfolio on their own.

LGBT individuals do not feel prepared to make wise financial decisions because they do not know what options are available to them, what to consider when evaluating those options, and how to get started. This feedback and self-awareness proves to be quite valuable for the financial services industry, as it offers an opportunity to offer guidance to this community as they prepare for retirement and achieving financial security.

the nature of LGBT households continues to evolve alongside legal changes. The rate of marriage has more than tripled in the past four years: 8% of LGBT respondents were married in 2012, compared to 30% in 2016

Demonstrating the Benefits of Professional Help by Establishing a Connection

For financial services companies aiming to support the LGBT community, it is critical to understand how they view and use financial professionals and firms. While fewer LGBT respondents work with a financial professional (29 percent) compared to the general population (39 percent), those who do work with a financial professional are markedly different in terms of their financial knowledge, attitude and aspirations.

Although these attitudinal differences may help to explain why these individuals sought expert advice in the first place, it is likely that financial professionals are helping clients in the LGBT community gain knowledge and change their mindsets in ways that promote more prudent financial choices.

In order to connect with the majority of the LGBT population who do not work with a financial professional, it is important to understand what the community cares about and seeks out when considering professional help.

For financial firms wishing to support the LGBT community, it is critical to support key social causes. The top causes that would impact the LGBT community’s decision to work with a firm are whether it supports:

  • Equal job rights for LGBT employees
  • Gender equality, e.g. equal pay for women
  • LGBT employee benefit equality
  • Racial equality

For each of these, around half of the LGBT respondents surveyed indicated that they would be “much more likely” to work with a firm if it actively supported these causes. On average, LGBT respondents were 20 percent more likely than general population respondents to say that a firm’s public support of a social cause would strongly influence their choice.

These findings provide solid incentive for the financial services industry to better promote and take a stand on social issues – not only because it’s the right thing to do, but also because these stands will drive positive business results. ◊