The LGBT Rich are a Fast-Growing Market - Robert Frank, CNBC, October 30, 2014
Gay and lesbian CEOs may still be few in number—but the ranks of openly gay and lesbian millionaires and billionaires are growing rapidly.
The announcement by Apple CEO Tim Cook on Thursday highlights just how rare it is for a Fortune 100 CEO to come out publicly as gay, even as public opinion has become much more embracing of LGBT rights and marriage. Yet when it comes to wealth creation, gays and lesbians have been making much faster and more visible progress, becoming a sought-after market in the wealth management business—especially among the newer, younger rich.
LGThere are no reliable numbers on the population of LGBT millionaires.Forbes estimates that seven of the world's billionaires are now openly identified as lesbian, gay, bisexual or transgender. The list includes media mogul David Geffen; tech tycoon Peter Thiel; Hyatt hotel heiress Jennifer Pritzker; health-care heir Jon Stryker; and fashion magnates Domenico Dolce, Stefano Gabbana and Michael Kors.
The number of millionaires and multimillionaires, while not officially quantified in any studies, is also growing, according to wealth management firms, accountants and financial advisors. And wealth management firms and private banks are now making more of an effort to court their business.
"The wealthy LGBT investor is increasing in importance for wealth management firms," said George Walper, president of Spectrem, a wealth research firm. "These investors are in need of experts because of their unique estate planning challenges."
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Indeed, a study by Spectrem, released earlier this year, showed that affluent LGBT investors share the same broad national concerns and priorities as the wider population, with most citing government gridlock, the political environment and the prolonged economic downturn as their top concerns.
Yet their tax and inheritance planning can be more complicated given the evolving legal issues surrounding gay marriage.
The study, which polled LGBT investors with $100,000 or more in investable assets late last year, found that 30 percent were married, and the same number were single and not living with anyone. One quarter of them were living with a partner with no legal agreement and 13 percent were in a domestic partnership.
Most LGBT couples filed joint tax returns and only a quarter of LGBT couples kept separate finances.
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The complexity of legal rights means that LGBT clients are more likely to seek financial advice, the survey found. Two-thirds said that their advisor should be "familiar with the unique financial situations of the LGBT community" regarding estate planning, trusts and wills. And 40 percent said their advisor should have other LGBT members as clients.
"The LGBT will be loyal clients to advisors," the Spectrem report said. "Taking time to develop strong relationships with these individuals will result in long-term loyalty."
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