Ways to add value when advising the LGBTQ community

Ways to add value when advising the LGBTQ community

Lisa Joyce | November 1, 2018

A secure retirement. Taking care of loved ones. Maintaining financial independence. Those are universal client desires.

But your lesbian, gay, bisexual, transgender, and questioning (LGBTQ) clients face some unique challenges while pursuing those goals.

According to TD Ameritrade's 2018 LGBTQ and Straight Millennials survey,* LGBTQ and straight Millennials share similar financial goals, but are on different paths to get there.

52% of straight Millennials are married vs. 29% of LGBTQ Millennials

LGBTQ respondents have a significantly lower average household income than straight Millennials, earning only $66,000 per year versus $79,000

Half (49%) of straight Millennials expect to have achieved the “American Dream" by age 40, and only a third (35%) of LGBTQ Millennials believe they will

And while 41% of straight Millennials feel financially secure, only 29% of LBGTQ Millennials feel secure, with 28% of LGBTQ respondents saying they don't feel secure at all, even though straight and LGBTQ Millennials both save and invest about the same percentages of income

*TD Ameritrade online survey of 1,519 Americans aged 21 to 37, half who identify as straight and half who identify as LGBTQ. Conducted by Head Solutions Group February 21 to March 7, 2018.

But income disparity isn't the only difference to keep in mind when it comes to financial planning for LGBTQ clients who are accustomed to discrimination and feeling different.

Diane Ouellette and Tracy Gale are partners in life and in business. The couple co-founded Gold Canyon Financial Planning located outside of Phoenix, AZ., and believe it's critical to be open about who they are to their community.

And it's working for them — about 80% of their clients identify as LGBTQ.

“Self-acceptance can be hard for LGBTQ clients," explains Ouellette. And this lack of confidence can impact whether or not LGBTQ clients feel comfortable even working with a financial advisor. “There is fear in working with an industry that is predominantly conservative," notes Gale. “As an industry, we don't feel inclusive."

Jill Hollander, managing partner of Financial Connections in Marin County, California, agrees that feeling safe is an additional challenge for LGBTQ clients. In many states, an employee can legally be fired for being gay (check your state policies here).

LGBTQ clients may fear losing a job for something as simple as asking for a raise or writing their partner's name down on a benefits form. They might even turn down a better paying position if it means moving out of a neighborhood where they feel safe.

Hollander is also open with clients about her sexual orientation and her 40-year marriage to her partner Bonnie. “There's nothing about our firm that is in the closet," laughs Hollander.

Ouellette, Gale and Hollander offer advice on how you can add value when advising LGBTQ clients.


The nationwide legalization of gay marriage in 2015 was a victory for LGBTQ clients in many ways — giving same-sex partners access to Social Security retirement benefits and disability and survivor benefits. But it also introduced new impacts on their taxes.

Thanks to the so-called “marriage penalty," married high income earners could pay more—a lot more—in income taxes than if they were unmarried.

"The tax reform bill passed in 2017 has ramifications for same-sex couples," says Ouellette. "So work with a trusted CPA to help clients understand how they may be affected. Also consider the impact of the exclusion of capital gains up to the first $500,000 for married couples versus the $250,000 exclusion for singles."

And since any marriage can end in divorce, explain the differences in community versus non-community property states and whether a prenuptial agreement makes sense if a couple has different asset and income levels. Since divorce is often expensive and contentious, seek support from LGBTQ-friendly mediators and attorneys.

Retirement planning

Only 38% of LGBTQ Millennials expect to feel financially secure in retirement compared to 50% of straight Millennials, according to the TD Ameritrade survey, making retirement planning critical for LGBTQ clients. Remind clients to update their beneficiary designation on qualified benefit plans if they get married. Many clients mistakenly believe that this isn't necessary since they named their partner before marriage was legalized.

Also remind clients that a spouse cannot give away his or her retirement plan assets at death to anyone other than the spouse without the spouse's written consent. IRA assets can also be moved directly into a spouse's IRA. By rolling over a deceased spouse's IRA, clients can enjoy the benefit of continued tax deferred compounding on the account's asset growth, notes Ouellette.


You can also add value by helping LGBTQ clients navigate workplace healthcare benefits. Half (53%) of LGBTQ Millennials have access to health insurance benefits for themselves and 45% have access to health insurance for their partners compared to 67% and 60% of straight Millennials.

In addition to extending workplace benefits to spouses, some employers extend benefits to domestic partnerships as well, so help LGBTQ clients research and take advantage of any workplace benefits available to them.

"It can be difficult for LGBTQ clients to find a doctor they can trust," says Gale. "They may not understand how to use heath savings accounts, long-term care insurance, or health care power of attorney." When the Affordable Care Act became law, Gold Canyon worked with a health broker to help clients navigate the options and plans.

Eldercare and end of life

A will and power of attorney are basic documents everyone needs. But married couples have some safety nets that unmarried partners don't enjoy, says Hollander. For example, an estate is designed to automatically pass to a surviving spouse—but for unmarried partners, the estate will pass to a blood relative. This means that it can be critical to have the correct beneficiaries on life insurance policies, 401(k)s and IRAs.

Naming a trustee or executor in trusts and wills is often difficult for LGBTQ clients, especially those who don't have children or trusted family members, so help clients find qualified trusted fiduciaries to fulfill this role. Clients needing assisted living often face discrimination so assist elderly clients in finding LGBTQ-friendly resources.

Financial education

Your LGBTQ clients may not feel confident in their ability to manage their financial lives. In the TD Ameritrade survey, only 37% of LGBTQ Millennials feel very prepared to make good, informed decisions about their finances, compared to 46% of straight Millennials. The most unprepared? LGBTQ women, with only 30% saying they are confident.

One reason LGBTQ clients may feel less confident than straight clients is multi-faceted, but advisors willing to spend the time educating LGBTQ clients can help raise clients' self-confidence and potentially improve financial decision-making.

And finally, be prepared to advocate for LGBTQ clients who face discrimination, both overt and subtle. “Be bold when discrimination rears its ugly head," says Ouellette.


To learn more about LGBTQ issues:

Human Rights Campaign: www.HRC.org

Lambda Legal: www.lambdalegal.org

National LGBT Chamber of Commerce: www.NGLCC.org

PridePlanners (part of Financial Planning Association (FPA): www.onefpa.org

National Center for Lesbian Rights (NCLR): www.nclrights.org

Family Equality Council: www.familyequality.org

Gay & Lesbian Advocates & Defenders: www.glad.org

CenterLink: www.lgbtcenters.org

Transgender Law Center: www.transgenderlawcenter.org

SAGE: https://www.sageusa.org/

International Gay & Lesbian Travel Association: https://www.iglta.org/gay-pride-event-calendar/#pride-calendar

This material is designed for a financial professional audience, primarily registered investment advisors.

This information is intended to provide a general overview about the topics covered and to help you identify opportunities in your practice and important issues you may wish to consider in developing a strategy. Because TD Ameritrade Institutional does not provide legal, tax or compliance advice, this information is not intended to be relied upon as such. While TD Ameritrade Institutional hopes that you find this information educational and thought-provoking, you need to determine whether the information is appropriate and applicable to you and your firm. You should consult with attorneys or compliance experts that understand your particular circumstances before utilizing any of the ideas presented here in your practice.

TD Ameritrade, Gold Canyon Financial Planning, and Financial Connections are separate and unaffiliated firms, that are not responsible for each other's services or policies.

TD Ameritrade Institutional, Division of TD Ameritrade, Inc., member FINRA/SIPC. TD Ameritrade is a trademark jointly owned by TD Ameritrade IP Company, Inc. and The Toronto-Dominion Bank. © 2018 TD Ameritrade.