3 insights for financial advisors serving LGBTQ clients

When it comes to financial planning, no two clients are the same. Financial advisors say that’s especially true for a growing number of LGBTQ clients.

When the U.S. legalized gay marriage 10 years ago, some advisors in the industry wondered if the Supreme Court’s ruling in Obergefell v. Hodges would spell the end for planners serving gay couples as an advisory niche.

A decade later, that projection proved wrong. Serving LGBTQ clients as a niche has become an increasingly prominent part of the wealth management industry as the share of queer Americans continues to increase. Since 2015, the number of American adults who identify as LGBTQ has more than doubled, comprising more than 9% of the total U.S. population, according to the most recent Gallup poll.

Through professional organizations like the CFP Board and the XY Planning Network, prospective clients can specifically filter for LGBTQ-specialized planners. A cursory look found more than 2,600 financial advisors who specialize in serving LGBTQ clients. While that number still represents a relatively small percentage of the overall financial planning industry, advisors say it marks a clear shift from how the industry operated until recently.

“As recently as five years ago, which is when I started my firm, there really weren’t any advisors who kind of put on their homepage, ‘We serve LGBTQ clients,'” said Lindsey Young, founder of Quiet Wealth in Baltimore, Maryland.

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Up until the past five years, Young said many planners who served LGBTQ clients were hesitant to advertise that fact for fear of losing other potential clients in their area. But the rise of nationwide remote advising has changed that.

“We’re in a new world now where we’re not kind of limited in terms of working with just people locally, we can kind of focus on a national audience, and therefore we can focus on specific niches,” Young said. “It’s much easier to do that these days.”

Still, while remote advising and robust search tools make it easier for advisors to market to LGBTQ people, effectively serving them still takes a level of knowledge that not all advisors possess. For planners looking to better serve this growing community, a few key pieces of knowledge can make a big difference.

Cultural understanding is paramount for LGBTQ clients

When it comes to attracting queer clients, advisors say that cultural understanding is often as important as knowledge around specific financial considerations.

“I think the reason that it’s important to have a niche practice, or have a practice that sort of specializes in serving people in the LGBTQ community, is more of an issue of cultural competency,” said Landon Tan, founder of Query Capital in Brooklyn, New York. 

On a basic level, cultural competency can look like effectively using a client’s preferred pronouns or chosen names. While such practices may sound straightforward, Tan says they are skills that many advisors don’t practice if they’re not in or around the LGBTQ community in their personal lives.

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Advisors say the competency gap is why many queer clients prefer advisors who are themselves queer. Nearly 3 out of 4 LGBTQ investors said they would prefer to work with a planner who identifies as a member of the LGBTQ community, according to a 2023 survey from the CFP Board. That preference is largely a proxy for cultural understanding and acceptance, Tan said.

“It might seem a little bit paradoxical, but if you’re in an environment where you are seen as normal, then it’s a lot easier to actually focus on your finances,” he said. “You can be really open, and openness and trust are really important to getting the information that you need to give good advice, and then be able to influence clients in a positive way.”

Planning across a range of household structures

Advising LGBTQ clients can often involve planning around a range of different relationship dynamics and household structures.

“It’s all over the map … how LGBTQ couples manage their household finances,” Young said. “Some of them even say, ‘Look, even though we’re married or it’s a domestic partnership, and we’ve been together for a long time, we’re each responsible for our retirement savings,’ and so it just kind of depends on what that relationship is.”

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That dynamic can become even more complicated with polyamorous people, Young said. U.S. tax structure and financial planning tools are largely geared toward single individuals or married couples, making a financial planner’s task more complex when planning for domestic partnerships and relationships containing more than two people.

Estate planning for childless households

Some 2.5 million LGBTQ adults are parenting children under the age of 18, according to the Williams Institute at the UCLA School of Law. But many queer adults have no heirs — and that becomes a key factor in financial considerations such as estate planning.

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“Estate planning when there are no natural heirs is often very different,” said Steve Branton, managing director at Wealthspire Advisors in San Francisco. “Much more consideration needs to be given about who will take on significant roles in the estate plan over time (successor trustees, powers of attorney, etc.) as well as how estates are distributed.”