Financial planning insights for the LGBT community
Over the last decade, many companies have paid increasing attention to the buying power and consumer habits of the Lesbian, Gay, Bisexual and Transgender (LGBT) market. But until recently, little attention has been focused on the financial experience of LGBT individuals.
The groundbreaking “LGBT Financial Experience 2012-2013 Research Study” by Prudential Financial takes an in-depth look at the financial challenges and concerns of LGBT Americans, and provides eye-opening insights for individuals seeking financial services that will address their own circumstances.
“This is an important baseline study that provides a snapshot of the financial lives and experience of LGBT Americans today,” says Debra Abbott-Walker, manager of Agency Recruiting for Prudential in White Plains, N.Y. “We hope that its insights will enable both Prudential and the financial services industry as a whole to better serve people of all orientations and backgrounds.”
Abbott-Walker, an experienced financial services industry professional, says she finds the study compelling from both a professional and personal standpoint. Abbott-Walker, a lesbian and married mother of two, has extensive experience in marketing and selling financial services and insurance products to members of the LGBT community.
“The study concludes that financial health and decision-making vary significantly by gender, generation, ethnicity, state of residence and relationship status,” says Abbott-Walker. “The research also highlights financial concerns and challenges related to the legal status of LGBT relationships that are unique to the community.”
Measuring the financial confidence index
The study finds that LGBT Americans earn a Prudential Financial Confidence Index score of 48 out of 100, right in the middle. While income levels span the economic spectrum, as a whole the LGBT community is largely in the middle class.
“Overall, we found the LGBT community solidly in the middle when it comes to their financial attitudes and actions. Attitudes toward investing, savings, home ownership and debt are more moderate, compared to Prudential’s general population research,” says Abbott-Walker.
The LGBT community as a whole shares common struggles yet retains distinct traits, outlooks and characteristics. For example, lesbian couples are far more likely to have children than gay men. The bisexual community is comprised of both opposite-sex and same-sex couples, while transgender people often face increased economic discrimination. With that in mind, LGBT individuals seeking financial planning advice should avoid a “one size fits all” approach.
Tips for meeting with a financial professional:
1. Discuss the benefits of a will or trust. Without a will, the intestacy laws of your state will govern distribution, and assets will not pass to an unrelated or unmarried partner. A trust is a good idea for LGBT couples whose families may not support their relationships, increasing the odds that a will may be contested.
2. Make beneficiary designations. LGBT couples may wish to list each other as beneficiaries on life insurance, 401(k) plans and IRA accounts. On non-retirement accounts, consider establishing “transfer-on-death” or “payable-on-death” provisions where state law permits such transfers.
3. Establish a durable power of attorney. These documents are important for same-sex couples who are not afforded the same range of privileges and access to each other’s financial information as opposite-sex married couples.
4. Consider a health care proxy and living will. These documents are important because same-sex couples are often denied “next of kin” status by hospitals and other medical care providers.
5. Understand the limitations of Social Security benefits. LGBT couples can have difficulty accessing the Social Security benefits of their partners, even when their home states recognize their marriages. Your retirement savings strategy will need to take this reality into account.
A timely opportunity
The Prudential research study uncovers a wealth of information that can positively impact the lives and financial futures of the LGBT community. For more insights on this topic, visit www.prudential.com/lgbt.