Pride and Prejudice: Exploring Persistent Wealth Challenges Within the LGBTQ+ Community

Emma Palethorpe from St. James's Place and Matt Cameron from LGBT Great explore some of the persistent challenges that LGBTQ+ people face with wealth accumulation – and what can be done.

As part of their commitment to supporting all clients with every aspect of their financial lives, St. James's Place recognize that people in minority groups often have specific concerns or face particular challenges when it comes to money. For LGBTQ+ people, those range from the higher costs of starting a family to the disproportionate risk of mental- health problems, which can impact earning potential and decision-making around finances. To find out more, 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 organization and membership community that champions LGBTQ+ equity in the financial-services industry, discuss the topic.

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

Emma: 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: The barriers and challenges that LGBTQ+ people face vary, depending on which part of the community they come from. Meanwhile, other aspects of identity such as race and gender may create additional barriers. For example, I have the benefit of being a white man; I look like the majority of the leadership in the [financial-services] industry. If I was black and trans, I’d very likely be the only one – and we know that has an impact on how we feel. Here in the UK, there’s an issue around inheritance planning. LGBTQ+ couples are less likely to be in civil partnerships or marriages – 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 recognize 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?

Emma: 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.

Matt: 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 will involve a long and rigorous process over many years and time away from work – again, that needs a plan. A financial adviser doesn’t necessarily have to understand all the issues, but it helps if they’re aware of some of them and have the confidence to ask questions in the right way. They’re much more likely to build trust and confidence with the person they’re talking to.

Is there an impact on earning potential as well?

Emma: I think it’s less about the earning potential and more about the saving potential – although a lesbian couple is going to be hit by the gender pay gap twice. 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.

Matt: LGBTQ+ people are disproportionately more likely to be impacted by different mental- health and wellbeing challenges. Trans people are at particular risk of trying to take their own life. More broadly, LGBTQ+ people may feel a lack of belonging within their workplace or home life, or feel under financial pressure due to the higher cost of starting a family. All these things present issues when it comes to wealth accumulation and financial decision-making. The finance industry is starting to think about services for this community, but we’re only at the tip of the iceberg.

When it comes to financial planning and working with an adviser, what are the challenges?

Emma: A couple of things spring to mind. One is around coming out. Coming out isn’t a ‘one and done’ thing – it’s a constant throughout life. So, I think that coming out to a financial adviser, who might not understand you, is challenging. That fear of not being accepted might make people reluctant to seek financial advice. The other thing is LGBTQ+ folk might not be aware that their needs are different. So, they might look at general advice on personal finance and think it applies to them without realizing that actually, there are some specific things they may need to consider. 

There have been some big steps forward in LGBTQ+ rights in the past 15 years or so. What’s still to be done?

Emma: Until 2019, being transgender was classed as a mental disorder [by the World Health Organization]; that’s no longer the case. But as always with the advancement of rights, there’s opposition. The bigger challenge is around public support. For lesbian and gay people, there’s maybe a better degree of acceptance than, say, 20 years ago, which is great. But for the trans community, there’s a lack of understanding of trans identities and what it means to be trans, which is causing some resistance to the advancement of trans rights.

Matt: If you look at the financial- services industry, there’s certainly been a move forward. We’re starting to see more firms talk about it. We do have to get this right internally – and I think if you do that, it will permeate externally. We know from our LGBTQ+ data capture that when this community sees something that promotes their identities and values, they feel good. The portrayal of trans and non-binary identities in the media is often negative, and that’s very damaging to how non-LGBTQ+ people view those issues. We’re also seeing, for example, religious dogma around LGBTQ+ identities and how the two aren’t compatible, or the banning of LGBTQ+ recognition and visibility in schools. All of these things are creating a difficult place to be LGBTQ+, which creates an element of fear. This means it’s becoming increasingly important for LGBTQ+ people to see something that resonates with them and indicates that they’re in a safe place.

What about people who aren’t LGBTQ+ – what role can they play in helping tackle the challenges that LGBTQ+ people face?

Emma: I’ve read research recently showing that support for the trans community increases when a person knows someone who’s trans. And I think it’s probably the same across the whole LGBTQ+ community. If you know someone who is LGBTQ+, your empathy for that community will increase. Take the opportunity to stand up for LGBTQ+ folk when they’re not in the room and consider the LGBTQ+ angle of decisions you’re making. There are a lot of LGBTQ+ people in the UK. The number of people who openly identify as LGBTQ+ is growing by generation. They aren’t going away and will become more and more influential over time, particularly as they start to inherit the wealth of previous generations.