Working with diverse communities towards a diverse financial planning strategy is an evolving process that requires an open mind and an easy sense of humor.
Speaking on Wednesday in a panel discussion at the InvestmentNews Women Advisor SummitMarci Bair, president and founder of Bair Financial Planning, said even trying to categorize the community is an ever-changing target.
“It’s LGBTQ-plus, because we’re always adding something,” Bair said. “Universally we call it the gay community.”
While it might seem like fun to poke fun at the evolving nature of the community, panelists stress that any advisor looking into this niche market needs to take an agile perspective.
Erika Karp, Director of Impact at Pathstone Stonesaid that sometimes the biggest challenge is knowing where clients stand in terms of their own diversity and that it is up to advisors to find the right approach to meet certain needs.
“We want to know what people are interested in, and it’s about meeting customers where they are,” she said. “It’s not unlikely that your clients have gay family members and gay friends.”
The session, titled ESG, DEI and Financial Planning for the LGBTQ+ Community, touched on the full range of nuances related to the financial planning needs of various clients.
As an example of efforts to understand and not offend, Karp shared an anecdote about asking an employee if he considered himself “an African American man, a black man, or a person of color.”
“He enjoyed it,” she said.
Bair added, “Don’t be afraid to trip over things. We all come from a place of care and concern and we want to learn. It is well received if you come from this point of view.
Bair said the niche category has plenty of room for more financial advisors. “I recommend we get more allies because there aren’t enough gay counselors for the gay community.”
Echoing Karp’s comments, Bair said the first step is to be open that you may already be working with gay clients.
“Look at your current business portfolio and ask your clients what’s important to them and what you should be aware of when doing financial planning,” she says. “Our family structures may be a little different, but we all want the same thing.”
If the goal is to develop a niche practice focused on the LGBTQ community, Bair advised getting fully engaged.
“Take your practice to the next level,” she said. “What does your website look like, do you still use husband and wife factors? Maybe change that to spouse and partner. Don’t just wash away the rainbow by throwing up a rainbow flag It’s up to you to make your office welcoming so that they bring their partner with them.
Karp offered perspective on how far the LGBTQ community has come, but said the financial planning community is often out of step with developments.
“We have gone further than I could have imagined 10 years ago,” she said. “I didn’t think we would have a federal same-sex marriage. Without gay marriage, if I died, my wife would have a huge tax burden, she might have had to move out of our house.
Karp added: “The world has gotten easier from a financial planning perspective. But we still need to understand what our customers want, what they feel strongly, and what our resources are for them.
Turning the conversation to ESG investing, Bair said the gay community in general is a natural fit for ESG.
“A lot of people in the gay community are very discerning about which companies they want to invest in because we’ve been discriminated against for so long,” she said. “If you are going to work in the community, I suggest you familiarize yourself with ESG investing.”
Karp cited the Securities and Exchange Commission’s recent proposal that would require public companies to follow ESG reporting guidelines as a step in the right direction. But she said advisers should be wary of the ESG-related data and rankings that are currently available because there are no standards.
“In my view, ESG analysis is an investment research discipline,” she said. “You can call it whatever you want. It is investing. Every type of investment requires an ESG analysis.