The financial services sector is remarkably unattractive to many in the LGBT community. One result of this is people who are LGBT don't make suitable provisions for their retirement. This needs to change.
It's time to face facts. Many people imagine that "gay" issues are 'won' or 'over'. Some of those views even come from within the LGBT community - we have legal equality now and we need to work on bullying and poor attitudes but largely that's it.
This ignores, or worse hides, some strong undercurrents that are going to hit the LGBT community soon, and some that are already here and growing.
There is progress in certain areas. We now talk more openly about the higher levels of mental health issues in the LGBT community, highlighted in the recent book Straight Jacket by Matthew Todd (a captivating read for anyone interested in how the mental health epidemic is managed in the LGBT community).
We often aim to subscribe to a golden rule - we can deal with issues only if we are open and honest about them. Yet we continue to ignore the extent to which the LGBT community has failed to look after itself financially. As our march for equality has embraced marriage and children, we need longer-term protection and savings. Yet, have we caught up? The LGBT community has a reputation for being high-living and high-consumption, focussed on short-term debt such as credit cards instead of long-term retirement savings. Where does basic financial protection figure as the first generation of LGBT individuals who are truly 'out' starts ageing?
The picture is pretty serious. In a recent Blackrock survey on LGBT finances, the LGBT community scored worse than the non-LGBT community in prioritising paying off mortgage debt and saving for retirement. In an Emerald Life survey from 2016, LGBT respondents were 50% more likely to have no insurance whatsoever (including life insurance), despite planning similar amounts of travel or home purchases as non-LGBT respondents.
And is the financial planning provided even suitable for the LGBT market? In general, 46% of LGBT people are single, compared to 20% of non-LGBT (so twice as likely to be single). And in retirement you are three times more likely to be single if you are LGBT. A lot of traditional financial planning often looks solely at how to leave funds to partners and children when you die. Those schemes are simply wrong for someone not planning to have children and who wants to save a lump sum to use on a fabulous retirement or who doesn't want to leave something to nieces and nephews. Often, LGBT customers feel uncomfortable coming out to a financial adviser, which exacerbates the problem. A previous survey showed that 44% of LGBT customers are not honest about their sexuality to financial advisers. That is a shocking statistic when long-term savings and planning decisions are being made.
And the position is even worse for LGBT women. Only 47% have starting retirement saving, compared with 58% LGBT men and 56% non-LGBT women.
The question, then, is how do we fix this problem? Is it even possible with a population so dramatically under-protected? Clearly, someone who is 60 with insufficient savings cannot realistically make up the difference. However we do need to try harder to make the financial services sector more welcoming to all diverse communities, who are often more economically-challenged in the first place. We should consider more dedicated outreach programs so that those young enough to make a change can be educated and prepare properly for their retirement.
This is a long-term project, but there are some easy wins:
• Make people feel included by using more diverse images in marketing and advertising campaigns
• Make sure call centres don't make gender-based assumptions and are trained to deal with a discussion on same-sex or transgender issues
• Think about products. Everyone needs proper cover, but an LGBT customer might need extra protection in certain areas (for example, discrimination cover or making sure that policy definitions of family properly reflect today's diversity)
The situation is serious. Members of the LGBT community don't want to be a disproportionate burden on the state. As the LGBT community continues to push the equality agenda in increasing sophisticated ways, we should educate ourselves, younger members of the community and the financial services sector about what we need.
Note: This blog is based on Emerald's own YouGov surveys, supplemented with data from Blackstone, Stonewall and Nationwide Building Society