Gay and lesbian investors are upbeat about the economy as well as confident about their own financial future, more so than the general population, according to a Wells Fargo nationwide survey of lesbian, gay, bisexual and transgender (LGBT) investors. Three out of four expect a more robust U.S. economy over the next two years, while 47% of the general population holds that same view. The survey also captured a great deal of optimism around the future of same-sex marriage and civil unions. Roughly two-thirds, or 66%, of LGBT investors are feeling positive about the political direction of the country, compared with 43% of the overall population.
The picture is not entirely rosy, however. “While optimism and confidence among LGBT investors remain high, there is clearly an awareness gap related to the very complex financial issues facing same-sex couples,” says Kyle Young, Financial Advisor and Vice-President, Investment Officer in the Short Hills, New Jersey office of Wells Fargo Advisors. “Lack of federal recognition of same-sex couples adds many layers of challenges to retirement and estate planning for all LGBT couples. Proper analysis and planning that comes with a financial advisor who understands the landscape of today’s differing state-by-state approaches is essential.”
In a list of financial concerns, “saving for retirement” was the top concern for LGBT respondents at 38%, followed by healthcare costs at 18% and paying monthly bills, 16%. LGBT adults with children consistently report more financial challenges, including preparing for retirement, than LGBT adults without children. LGBT adults with children feel less financially comfortable than those without (42% vs. 61%), and less confident in their financial future (40% vs. 68%).
Despite heightened attention to same-sex marriage and civil unions, tremendous confusion remains around transfer rights and benefits for same-sex couples. Nearly half of respondents did not know that Social Security income and benefits are not transferable to a spouse or partner in same sex couple relationships. Similarly, fewer than half correctly answered that other assets and benefits like real estate, life insurance, and retirement savings may be transferable depending on the state in which the same-sex couple resides. Only 36% of LGBT adults know that federal taxes on survivor assets or benefits are different for the spouse/partner in a same-sex marriage than in a heterosexual marriage.
Despite marriage equity in some states, LGBT couples face legal hurdles related to federal tax law as a result of restrictions under the U.S. Defense of Marriage Act (DOMA), which among other things makes it illegal to transfer Social Security benefits to a same-sex spouse. The U.S. Supreme Court is hearing arguments this month over DOMA and California’s Prop 8, which bans same-sex marriage in the state.
Regardless of the outcome of those cases, the Supreme Court’s rulings will have long-lasting effects on the LGBT community’s financial planning. The survey highlights Wells Fargo’s efforts to cater to LGBT customers. In 2010, Wells Fargo worked with the College of Financial Panning to launch its Accredited Domestic Partnership Advisor program. Other financial firms, including Bank of America Merrill Lynch, Northern Trust, and Ameriprise, offer specialized services as the nation’s banking and financial industry is increasingly looking at the LGBT community as an important niche market.