Financial factors impacting the LGBTQ+ Community

13th June 2023

At a glance

  • LGBTQ+ people face unique challenges impacting their earning potential and decision-making around finances.
  • Many factors present issues when it comes to wealth accumulation.
  • Financial advice from an adviser you can trust can help plan for the future you want.

For Pride Month, we explore some of the persistent challenges that LGBTQ+ people face with wealth accumulation – and what can be done.

LGBTQ+ people face a host of unique challenges and considerations when it comes to their finances – from the higher costs of starting a family to a disproportionate risk of mental-health problems, which can impact earning potential and decision-making around finances. 

To find out more, we speak to two experts: Emma Palethorpe, Head of Change (Asia) at St. James’s Place and Chair of the SJP LGBTQ+ Network; and Matt Cameron, Founder and Managing Director of LGBT Great, an advocacy organisation and membership community that champions LGBTQ+ equity in the financial-services industry.

How might being LGBTQ+ affect people’s financial plans?

Emma explains, “One of the common themes we’ve seen at SJP is around same-sex partnerships. Not marrying will impact your spousal rights in terms of pensions. If one of you dies and you’re not married, the rights to the pension may not get passed across.”

Matt goes on to say, “The barriers and challenges that LGBTQ+ people face are different, depending on which part of the community they come from, and other aspects of identify such as race and gender may create additional barriers.

Here in the UK, there’s an issue around inheritance planning. LGBTQ+ couples are less likely to be in civil partnerships or marriage – especially a lot of older LGBTQ+ couples, who don’t want to get married because the institution of marriage has excluded them for so long. So it’s really important they have a Will (formally leaving assets to their intended beneficiary). 

Also, if you’re moving abroad with a spouse to a country that doesn’t recognise same-sex marriage, that can impact on your husband or wife having access to your pension (if you die). It’s very complex.”

What about additional expenses?

“As a same-sex couple, having a family is often more expensive. Whether you go down the IVF or the surrogacy route, you have to factor this into your financial goals and planning.” continues Emma.

Matt explains, “If you want to go through surrogacy, chances are it’s going to cost you £100,000. That needs a plan. If you’re (transgender and) planning to transition, it’s going to involve a long and rigorous process over many years and time away from work – again, that needs a plan.”

To read more about the hidden costs facing LGBTQ+ parents, click here.

What’s the impact on earning potential?

“It’s less around the earning potential and more the saving potential – although a lesbian couple is going to be hit by the gender pay gap twice” Emma explains. “LGBTQ+ people are more likely to have additional savings goals; for example, if you’re transgender and you’re putting £100 a month aside for surgery, that’s £100 a month that’s not going into your pension.” she says.

Matt goes on to say, “LGBTQ+ people are disproportionately more likely to be impacted by different mental health and wellbeing challenges – for example, the lack of belonging within your work or home life, the higher cost of starting a family. Trans people are at the highest risk of poverty. They’re the most likely part of the community to attempt to take their own life. LGBTQ+ women are more likely to be living in a single household and less likely to have the same level of wealth as their heterosexual counterparts.”

Matt continues, “All these things present issues when it comes to wealth accumulation. The finance industry is starting to think about services for this community, but we’re really only at the tip of the iceberg.”

What’s the challenges with financial planning and working with an adviser? 

Matt says “In the financial-services industry, there’s certainly been a move forward. We’re starting to see more firms talk about it.”

Emma continues “But one challenge that springs to mind is around coming out to a financial advisor, who might not understand you – this can be challenging and might make people reluctant to seek financial advice – that fear of not being accepted.

The other thing is LGBTQ+ folk might not be aware that their needs are different from the non-LGBT community. So they might look at advice and think it applies to them when, actually, their needs might not be the same.

A financial adviser doesn’t necessarily have to understand all the issues, but it helps if they understand some of them and have the confidence to ask questions in the right way.” Emma explains.

Get in touch

If you need help navigating your financial challenges, get in touch with us.

SJP Approved 12/05/2023