How Financial Professionals Can Be Better LGBTQ+ Allies

Speak out beyond Pride Month and understand the special concerns of this community. Lee Reisch from Morningstar discusses the value of LGBTQ+ allyship from financial professionals, going into detail about understanding potential legal implications regarding the community and the vital role inclusivity plays.

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Each year, more companies display rainbow-washed versions of their logos to demonstrate support for the LGBTQ+ community. But this diverse group continues to face its fair share of economic hardships, driven by factors like restrictions on medical benefits for same-sex couples. For financial advisors, how can the financial services industry offer meaningful inclusion that pays more than lip service with a rainbow flag? “It’s a good business and it’s a good market if you’re going to provide the services. This is a group that experiences a lot of bigotry, especially in financial services, which tends to be more populated by conservative providers,” says Sheryl Rowling, director of financial advice for Morningstar and a retired advisor.

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For investors and their advisors, there are many reasons to support LGBTQ+ inclusion. It’s most important to recognize that LGBTQ+ inclusion is human inclusion. Protecting and respecting human rights can have a positive impact on your business even if you don’t relate to their personal experience. One study shows that “firms with LGBT-friendly policies tend to enjoy both higher profitability and higher stock market valuations” Another shows that LGBTQ+ global annual spending power (sometimes dubbed Pink Money) is estimated at $3.9 trillion. And not being inclusive has its costs. Recently, some major companies wrapped up in controversies stemming from LBGTQ+ relations issues faced consumer backlash.

Placing a pride flag on prominent display is a foundational starting point—a classic example of what’s called passive allyship. While being passive may be a suitable investment and wealth-building approach for some clients, it is not enough to profoundly advance the financial and mental health of the LGBTQ+ community. Says Rowling: “It’s not as simple as saying this is a great market for me to go after, so I’m going to put rainbow flags on my practice and get clients.”

Understanding the community’s concerns is a key step. Says Victor Orozco, managing partner of San Diego, CA-based Bair Financial Planning, which serves 250 families with $110 million in assets, “We have an open space for clients to be their authentic selves.” Orozco says 45% of Bair’s clients “identify with some part of LGBTQ+,” while the other 55% are “allies.” To connect with this group, it’s important, first, for advisors to understand it. I consulted with members of Out@Morningstar, Morningstar’s DEI resource group for employees who identify as a member or an ally of the LGBTQ+ community. These are professionals supporting financial services, and each brings their experience to shine a light on community challenges.

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