Why advisors need to consider the unique financial challenges of LGBTQ clients

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More than one million Canadians identify as LGBTQ, and advisors should take stock of whether they may be underserving these clients inadvertently.

Cindy Marques, president and certified financial planner (CFP) at MakeCents in Toronto, says one-quarter of her clients identify as LGBTQ and all of them contacted her directly upon learning that she identifies as a queer woman and does financial planning for that community. She’s able to draw parallels from her own financial experiences to help serve their needs.

“I haven’t had to prospect for queer clients. So, that’s telling me these Canadians are looking for representation,” she says. “They want that sense of empathy from the professional they’re working with.”

Ms. Marques says many of her LGBTQ clients experienced stigma when they interviewed previous advisors.

“Often, they don’t use the right language and might offend unintentionally,” she says.

She uses the example of an advisor meeting with a married female prospect, and the advisor assumes she has a husband instead of a wife. Using the word “spouse” is a small but inclusive gesture that puts people at ease.

Laura Whiteland, owner and CFP at Inclusive Financial Planning in Truro, N.S., says some advisors are uncomfortable hearing about the financial challenges LGBTQ people face, and prospects often pick up on that.

“The counterbalance to saying the wrong thing is spending more time listening,” she says. “You want to create an environment that encourages people to say what matters to them and then respond with empathy.”

While LGBTQ clients’ financial needs may be similar to those of other clients, there are differences, said Jarvis Sam, chief executive officer and founder of The Rainbow Disruption, a diversity, equity and inclusion firm based in Portland, Ore. Mr. Sam spoke to trust and estate practitioners at the STEP Canada conference earlier this month.

For example, Mr. Sam said “dead naming” is a huge challenge in the trans community, in which the person is referred to by the name given at birth, not the name they have selected that aligns with their current gender identity.

Ms. Whiteland notes a hesitancy among her trans clients to have wills or powers of attorney prepared before they change their legal name or gender identifier. “It’s risky to not do anything,” she says, in terms of estate planning. With official documents, the trans client will be remembered as they are today, not who they were previously.

As for other differences, Ms. Whiteland notes more LGBTQ couples have a significant age gap between them, and planning is needed to accommodate the younger spouse who likely will have “more life left to live.” She adds that some relationships may feature communal households with more than one partner.

Ms. Marques adds that many of her married or common-law LGBTQ clients may be pursuing in-vitro fertilization, fostering or adoption to start or expand their families. These expanded costs need to be factored into their financial plans.

She has also found more of her clients gravitating toward residing in larger cities where they feel accepted and among like-minded people. But living an urban lifestyle is likely more expensive and advisors need to understand that urban living may not be negotiable.

While proper estate planning is a must for all Canadians, it’s especially important for LGBTQ clients to ensure their intentions match the paperwork. Ms. Marques uses the example of a family of a common-law LGBTQ couple that doesn’t respect the relationship. If one partner were to pass away, a family member may supersede the surviving partner, depending on the province’s estate laws, without a will and power of attorney in place. Property rights to a surviving spouse may not be guaranteed unless the couple is legally married, depending on the province, she notes.

“While the law doesn’t necessarily treat queer and heterosexual relationships differently, it’s a fact many queer couples live as common-law spouses and are not married,” she says.

Ms. Whiteland points out that Nova Scotia, where she resides, has different rules for marriage and common law, while British Columbia has recently recognized common-law relationships as similar to marriage.

Ms. Marques emphasizes that her LGBTQ clients name beneficiaries on all registered accounts and insurance policies. Doing so means those assets would bypass the will and flow directly to named heirs of the person’s choosing.

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