Although financial and legal equality for the LGBTQ+ community is closer to a reality, members of this group may be suffering from lingering financial problems that have built up over the long term, according to Michael Gannon, head of enterprise marketing and client experience at Equitable.
These holdover, and sometimes ongoing, financial issues require special planning and empathy from financial advisors, Gannon said in an interview.
“A piece of the solution to these problems is education for advisors to help them connect with clients who do not fit into traditional roles,” he added.
Some of the financial issues that faced the LGBTQ+ community in the past have been settled legislatively on the state and national levels, with job discrimination in hiring and promoting now against the law, and members of the group having the right to marry and receive the tax and health care benefits that brings with it.
But some people have suffered financially for 20 or 30 years, when they could not get those benefits, such as being put on a partner’s health insurance, and they are still trying to catch up, Gannon said.
“LGBTQ+ individuals may have faced limited employment options or serious setbacks,” he said. “While workplace cultures have improved, there are still many fields that are now, or have been, less welcoming or even hostile. Until 2020, in fact, it was still legal in more than half of the United States to fire someone for their LGBTQ+ status. These realities can have long-term impacts on earnings and savings and are exacerbated particularly for trans people and LGBTQ+ people of color.”
It takes an empathetic advisor to help them work out these issues in the light of new laws and new attitudes, he added.
“While the Supreme Court established the right to marry in 2015, its benefits were not retroactive. Many couples faced years or decades of disadvantaged tax, estate planning and healthcare structures,” Gannon said. “These inequities can have long-term impacts on financial well-being and retirement readiness. A financial professional can help optimize the financial strategy” for nontraditional couples and individuals."
There is a myth that sometimes swirls around the LGBTQ+ community that couples are well-off power couples with no children, he said. “These couples surely exist but can distract from the true experience of the vast majority of the community,” he said. “The reality is more nuanced and influences one’s financial planning and progress to life milestones.”
Couples who decide to have children can face the high costs of adoption or surrogacy, plus the usual added cost of raising a child, the advisor said. Nearly 15% of same-sex couples now have at least one child in the home. Couples or individuals who choose to have children may face additional medical costs. They may need to finance $15,000 to $40,000 for adoption, with some estimates up to $70,000. The cost of surrogacy can easily exceed six figures. “These can be significant expenses to factor into a financial plan.” Gannon cautioned.