What CPAs Should Know About the Equality Economy

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Once-ostracized social groups, such as lesbian, gay, bisexual, transgender and queer/questioning (LGBTQ) people, are feeling increasingly accepted and a new study sends a strong message to accountants and financial advisors: Get on board.

According to T. Rowe Price’s Equality Economy study, the LGBTQ community in the U.S. has increased annually since 2012 and now represents 4.1 percent of the total population with an estimated buying power of $971 billion. What's more is that as attitudes and laws continue to change, the LGBTQ community is expected to grow.

For example, the study points out that 20 percent of Millennials describe themselves as LGBTQ while only seven percent of Baby Boomers do. “The sheer size and buying power of this group make them an important market for financial services,” the study finds. “Serving the Equality Economy is a strategic imperative for advisors seeking to grow their practice.”

But there’s a disconnect here, which is apparent in three key takeaways from the study:

1. LGBTQ investors are self-reliant

With a median age of 51, they know all too well what it was like to grow up in a time of marital inequality and limited or absent same-sex benefits. That instilled in them a do-it-yourself mentality for long-term financial planning. Most (80 percent) of LGBTQ adults are active investors; among the wealthy, it’s 95 percent.

The study found that advisors who work with this community will likely find them willing to take risks if it helps them grow their portfolios. They also want advisors to help protect their assets against political and economic influences on the market.

2. They’re open to guidance

They’re self-reliant but also value expert advice. About half (54 percent) are working with an advisor while 47 percent use social media to help with financial decisions. Nonetheless, 71 percent want to make their own investment decisions.

Almost half (44 percent) consider themselves as “validators” who seek outside advice to confirm their financial decisions. Only about a quarter (27 percent) go it completely alone.

Of those who do work with advisors, 80 percent prefer to work with firms that support the LGBTQ community. “A firm that demonstrates a commitment to inclusion signals to clients that the firm understands the unique needs of the community, which helps build trust in the advisor/ client relationship,” the study finds.

It’s important to note that the LGBTQ community doesn’t expect advisors to also be LGBTQ -- but that they are supportive. However, 16 percent of the study respondents indicated it’s very important that an advisor also is LGBTQ. Slightly more than half (54 percent) say how their investments perform is the most important aspect of working with an advisor.

3. They feel underserved

They’re willing to work with advisors but have a “low affinity for the financial services industry,” according to the study. Here’s the catch: They want to work with firms that are supportive of the LGBTQ community. Yet fewer than 10 percent could point to any firm as especially friendly to them.

Why? One reason is that few financial services firms actively engage with the LGBTQ community, and “that lack of presence is translating into a lack of trust,” the study finds.

The upshot? As the study suggests, “Whether an advisor identifies as LGBTQ, is an ally, has friends or family that are LGBTQ, or works with businesses with LGBTQ employees, the onus will be on the advisor to display their commitment to the community in order to best grow their practice in a way that creates a better future – one where everyone prospers.”

The research group Community Marketing & Insights did an October 2016 online survey of 1,300 LGBTQ adults with investable assets of at least $25,000 and household incomes of at least $50,000.

About Terry Sheridan

Terry Sheridan

Terry Sheridan is an award-winning journalist who has covered real estate, mortgage finance, health care, insurance, personal finance, and accounting and taxation issues for newspapers, magazines, and websites. A Chicago native and former South Florida resident, she now lives in New England.

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