Though the LGBTQ+ community is the fastest-growing minority segment in the U.S., at 7% of adults, only 3% of professionals in the CFP Board’s online directory list LGBTQ+ individuals as a client focus. This illustrates the need for allies to join those within the community in serving these clients. Achieving that begins with cultural humility.
The Many Dimensions Of Culture
As defined by the National Institutes of Health, cultural humility is “a lifelong process of self-reflection and self-critique whereby the individual not only learns about another’s culture, but one starts with an examination of her/his own beliefs and cultural identities.”
Cultural humility can help create space for clients to share the details of their financial lives, which is a critical part of the financial planning process. Productive client-advisor relationships can begin with making an intentional effort to understand the experiences of LGBTQ+ people.
It is no secret that culture shapes our financial decisions. One of the ways cultural beliefs can manifest is around the trustworthiness of financial institutions. Consider for a moment the fact that 48% of LGBTQ+ Americans have been discriminated against by someone in the financial services industry, according to a 2022 survey by The Motley Fool. Experiences such as these will inevitably have an impact on whether an LGBTQ+ individual feels comfortable seeking professional financial advice.
Adjusting The Approach
Money is personal, and beyond providing sound financial planning advice, the most important thing an advisor can do is provide an inclusive space for LGBTQ+ individuals, allowing them to feel safe and supported to express their financial needs.
That’s one reason why experienced financial advisors serving LGBTQ+ clients emphasize building a referral network of LGBTQ-friendly professionals, including attorneys who specialize in LGBTQ+ estate and family law. You might also consider vetting a financial therapist who specializes in serving LGBTQ+ people for your client referral list.
Examining Your Own Cultural Lens
For financial planners who want to better understand the impact of culture on money, a self-discovery process can lead to important insights.
The American Psychological Association’s “Addressing Cultural Complexities in Practice” offers the acronym ADDRESSING to lay out the dimensions of identity: Age and generational influences, developmental or other disability, religion, ethnicity and race, socioeconomic status, sexual orientation, national origin and language, and gender.
Gaining greater awareness of these dimensions of your identity will give you a better understanding of the perspective from which you are speaking to clients.
Learning How To Listen With Skill
Aside from examining your own cultural background and learning about other cultures, there are a few more actions you can take in pursuit of cultural humility. One of the most practical is active listening, sometimes called “listening with skill.”
Active listening encompasses several components, such as refraining from judgment, providing both verbal and nonverbal feedback, displaying patience, asking open-ended questions, and restating and paraphrasing the information received for verification. These actions demonstrate a sense of empathy and responsivity to clients.
Using these therapeutic communication techniques, you can begin to uncover a client’s true values that are often strongly linked to their identity. This can inform the goal setting process and help strengthen the advisor-client relationship.
Seeing Financial Anxiety Rise To 85%
Examining the latest research can also enhance your financial planning process in a way that honors the unique lived experiences of LGBTQ+ people. For example, a 2023 survey from Forbes Advisor showed that despite a generally positive view of their financial situations, 85% of LGBTQ+ adults reported experiencing financial anxiety, versus 79% of heterosexual adults.
Not knowing who to turn to for reliable financial advice could be a contributing factor to this anxiety around finances. An LGBTQ-friendly financial advisor who takes the time to understand an LGBTQ+ individual’s life goals, values and financial priorities has the potential to turn these numbers around.
Becoming An Educated Ally
Financial advisors working to authentically serve the LGBTQ+ community as allies can choose from a variety of learning objectives. A great start is to understand the nuances of LGBTQ+ clients’ goals, from saving for family planning to achieving a comfortable retirement.
You can discover this information in eMoney’s new guide, “Candid Conversations: LGBTQ+ Planning.” It features experienced financial planners' insights into addressing the opportunities and obstacles that LGBTQ+ clients commonly face, as well as communication strategies to deepen connections with clients. Think of it as a jumping off point for your journey to a more inclusive practice.
Dr. Emily Koochel is a senior financial planning education consultant at eMoney Advisor.