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How Financial Professionals Can Be Better LGBTQ+ Allies

Speak out beyond Pride Month and understand the special concerns of this community.


You may notice a broader and brighter color palette taking over corporate branding online and in your community during the 30 days of June for International Pride Month.

Each year, more companies display rainbow-washed versions of their logos to demonstrate support for the LGBTQ+ community. But this diverse group continues to face its fair share of economic hardships, driven by factors like restrictions on medical benefits for same-sex couples. For financial advisors, how can the financial services industry offer meaningful inclusion that pays more than lip service with a rainbow flag? “It’s a good business and it’s a good market if you’re going to provide the services. This is a group that experiences a lot of bigotry, especially in financial services, which tends to be more populated by conservative providers,” says Sheryl Rowling, director of financial advice for Morningstar and a retired advisor.

What Drives Corporate Uptake of LGBTQ+ Support for Pride Month?

For investors and their advisors, there are many reasons to support LGBTQ+ inclusion. It’s most important to recognize that LGBTQ+ inclusion is human inclusion. Protecting and respecting human rights can have a positive impact on your business even if you don’t relate to their personal experience. One study shows that “firms with LGBT-friendly policies tend to enjoy both higher profitability and higher stock market valuations” Another shows that LGBTQ+ global annual spending power (sometimes dubbed Pink Money) is estimated at $3.9 trillion. And not being inclusive has its costs. Recently, some major companies wrapped up in controversies stemming from LBGTQ+ relations issues faced consumer backlash.

Placing a pride flag on prominent display is a foundational starting point—a classic example of what’s called passive allyship. While being passive may be a suitable investment and wealth-building approach for some clients, it is not enough to profoundly advance the financial and mental health of the LGBTQ+ community. Says Rowling: “It’s not as simple as saying this is a great market for me to go after, so I’m going to put rainbow flags on my practice and get clients.”

Understanding the community’s concerns is a key step. Says Victor Orozco, managing partner of San Diego, CA-based Bair Financial Planning, which serves 250 families with $110 million in assets, “We have an open space for clients to be their authentic selves.” Orozco says 45% of Bair’s clients “identify with some part of LGBTQ+,” while the other 55% are “allies.” To connect with this group, it’s important, first, for advisors to understand it. I consulted with members of Out@Morningstar, Morningstar’s DEI resource group for employees who identify as a member or an ally of the LGBTQ+ community. These are professionals supporting financial services, and each brings their experience to shine a light on community challenges.

6 Ways Financial Advisors Can Support LGBTQ+ Clients and Community

1) Speak out, outside of Pride Month. Sabrina Macpherson, director of product development, climate solutions, at Morningstar Sustainalytics, says, “Show [support] through actions, words, and social media posts, that they—and their firm—care about the LGBTQ+ community outside of corporate Pride month campaigns on LinkedIn. It’s easy to be an ally when the firm has rainbow-washed your logos or have your bank sponsor local Pride festivities. It’s less easy—but more meaningful—when you comment on and speak out against the financial and legal challenges faced by the LGBTQ+ community across all months of the year.” Says Orozco: “This includes working with this community outside of June.”

2) Get to know each client. Make them feel safe. Like non-LGBTQ+ clients, everyone has a unique story and diverse financial goals to match. “This [advice] is not limited to financial planners or advisors. I wish professionals across the board would be more comfortable being uncomfortable,” says Ruth Saldanha, editorial manager at Morningstar. “The experiences you encounter will help you build a wealth of knowledge to support future clients facing the same situation.” Offering a safe space where your LGBTQ+ clients can share their circumstances will be appreciated tremendously. Remember: The right financial advice can change a person’s life.

3) Consider different LGBTQ+ life events that you might not relate to. Fair to say that raising children and personal healthcare costs can be immense and require financial planning. Morningstar’s Stephen Pham, manager of customer support, points out “two huge, life-changing events in [LGBTQ+] communities where the average cost can be more than $100,000. LGBTQ+ families looking to have children must consider the cost of adoption or surrogacy. Family planning is a common goal; quality financial planning and advice can help. Other personal medical costs might be associated with gender transition or reassignment. The transgender community needs better access to information and resources for financial advice or planning for these often-staggering medical costs.”

4) Embrace challenging financial journeys and understand LGBTQ+ local legal implications. Igal Avrahami Liberman, corporate solutions manager at Morningstar Sustainalytics, reminds us that “Different countries have different recognition levels for same-sex marriage, which also impacts a couple’s financial situation—current and future. The legal situation also needs to be considered, and financial advisors should be aware of this, too. Many LGBTQ+ people don’t have savings or financial support since they are not in touch with their families.” Igal adds, “Educate yourself about LGBTQ+ unique financial needs that are based on [your client’s] life experience and how financial decisions are affected. Don’t make financial assumptions that are based on a heterosexual or cisgender individual.

Expect different conversations as well as generational differences. For example, the older generation came of age at a time when there was no marriage equality and often keeps their finances separate. Younger couples combine finances and have different emotional dynamics. “Understand conversations you may not relate to,” says Orozco. With unmarried couples, take care to advise about ownership, inheritance, and medical powers of attorney. In some cases, families don’t support the relationship and have sold the house of a deceased relative, leaving the partner without a place to live, Rowling says. Be mindful that both parties may need their own attorneys, because otherwise families can challenge documents by saying one partner coerced the other.

5) Be more inclusive in your paperwork. Leave space for nonbinary options beyond male or female. Go further and include a question about clients’ preferred pronouns. Do your documents say, “husband and wife?” Redo them. “You may not stumble out of the gate. But to have the right lens, if someone from this community were to look at your business, are they being recognized?” says Orozco.

6) Promote or manufacture financial products that invest in companies that are advancing LGBTQ+ equity and inclusion. But be mindful of corporate social washing. Like greenwashing, it aims to curb companies’ attempts to profit from social causes, which in turn can elevate investor risk and can lead to negative societal impacts.

The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar’s editorial policies.

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