The Equality Economy: LGBTQ Investor Behavior Study
The LGBTQ community in the U.S. has grown each year since 2012 currently representing 4.1% of the total population1 with an estimated buying power of $917b2. This community is expected to grow even more as changing attitudes and laws allow individuals to live more authentic lives. As an example, 20% of millennials currently identify themselves as LGBTQ compared to 7% of Boomers3.
The sheer size and buying power of this group make them an important market for financial services. To better understand the financial behaviors of the community, T. Rowe Price conducted primary research through Community Marketing & Insights (CMI). The research consisted of an online survey of 1,300 LGBTQ adults. Specifically, we surveyed individuals over 21 with investible assets over $25,000. We also took a focused look at affluent individuals (AIs) with more than $500,000 in investable assets.
Three themes about the LGBTQ community and their investment behaviors
1. They are self-reliant investors.
The median age of participants is 51, which means they grew up in an era when marriage equality and same-sex benefits were not universal. Culturally, this created a population with a mindset that they have to look out for themselves when it comes to planning for long-term financial security. Our research shows that 80% of LGBTQ adults are actively investing assets to provide for long-term needs. For affluent individuals, that percentage goes up to 95%.
Gay and Bi Men and Women are confident they will have the financial resources needed to retire:
2. They are open to guidance.
Along with self-reliance, this community places a high value on the advice of experts. More than half (54%) currently work with an advisor and 47% use social media to seek out different perspectives to inform financial decisions. While they are willing to listen and learn from the experts, 71% ultimately want to make investment decisions for themselves.
What is important to LGBTQ investors:
3. They feel underserved.
Despite their willingness to work with financial professionals, our survey found low affinity for the financial services industry. This group has a strong preference to work with a firm that is known to be supportive of the LGBTQ community, but fewer than 10% could identify any investment firm as particularly LGBTQ-friendly.
The LGBTQ community is overall less trusting of financial institutions9:
Next Steps for Serving the Community
The LGBTQ community is large and continues to grow as cultural and legal changes make it possible for more individuals to live authentic lives. Through this study, we have gained a better understanding of the dynamic needs of LGBTQ investors as they navigate these changes. By drawing on this new understanding, advisors are positioned to anticipate and meet those needs.
Whether an advisor identifies as LGBTQ, is an ally, has friends or family that are LGBTQ, or works with businesses with LGBTQ employees, the onus will be on the advisor to display their commitment to the community in order to best grow their practice in a way that creates a better future – one where everyone prospers.
In October 2016, CMI surveyed a diverse group of 1,300 adults aged 21 and over who identify as LGBTQ. All participants have household incomes of at least $50,000 and investable assets of $25,000 or more, with a few exceptions. To compensate for younger adults not having as many assets, the research somewhat oversampled Millennials to include younger LGBTQ people, typically aged 28–31. Additionally, all coupled participants indicated that they share in the financial decision-making in their household. The survey has a margin of error or ±2.68% at a 95% level of confidence.
9 Forrester Data: Consumer Technographics North American Online Benchmark Survey (Part 2), 2017