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<a href="https://www.businessinsider.com/cost-of-inequity-how-inequity-persists-in-american-daily-life-2021-6"></a><div type="image" title="Parade-goers make their way down 5th Avenue during the NYC Pride March" height="736" width="1024" msid="83989222" hostid="261"></div><ul class="summary-list"><li>LGBTQ+ consumer spend could be worth as much as $5.6 trillion, according to <keyword id="48085" type="CITY" weightage="60" keywordseo="Credit-Suisse">Credit Suisse</keyword>.</li><li>But the ability to build and maintain wealth can still be an uphill battle for the community.</li><li>Experts explain the progress in removing barriers for the community, and challenges that remain.</li></ul>LGBTQ+ consumer spending in the US could be worth as much as $5.6 trillion,<a href="https://www.businessinsider.com/stocks-to-buy-cheap-high-quality-lgbt-inclusive-credit-suisse-2020-12"> according to a recent Credit Suisse report</a>, which highlights that if the population were an economy, it would be the third largest in the world.Yet the ability to create, build, and maintain wealth can be an uphill battle for members of the community.This contrast highlights a bifurcation for the LGBTQ+ community. On one side, the investment industry is breaking down barriers by taking the lead on inclusive policies and hiring strategies. On the other, barriers remain, from the creation and generation of wealth to the struggle to access executive-level roles, and the lack of mainstream investor awareness about supporting pro-LGBTQ+ policies."We start off behind, we struggle to play catch up and all of these issues have a cumulative effect on LGBTQ+ wealth creation," said Billie Simmons, cofounder of Daylight, a digital banking platform for the LGBTQ+ community, in a<a href="https://www.businessinsider.com/personal-finance/daylight-cofounder-billie-simmons-lgbt-wealth-creation-investing-strategy-fintech-2021-3"> recent Insider interview</a>. "And the statistics are staggering."<h2>Barriers to creating wealth</h2>Some barriers exist from an early age, making it difficult from LGBTQ+ people to create wealth that's comparative to their straight counterparts."I think that the LGBT community does [face] some cost burden that the straight community does not," said Nicole Douillet, principal at The Crescita Agency and a former quantitative trader who created the first LGBTQ-friendly investment product for Credit Suisse. "So even one could argue that right out of the gate when you're 20, you're already at a disadvantage."For example, same-sex couples are more likely to be rejected for a mortgage application compared to heterosexual couples,<a href="https://www.news.iastate.edu/news/2019/04/16/samesexmortgage"> according to Iowa State University.</a> On average, LGBTQ millennials make less than their straight counterparts, a 2018 TD Ameritrade survey found.LGBTQ+ people can also face higher one-off costs - for example, if same-sex couples decide to have children or if individuals decide to undergo medical treatments to transition.<h2>Barriers to managing wealth</h2>Once LGBTQ+ individuals start to accumulate wealth, they face the same hurdle as everyone else - access to good investment advice when seeking strong returns, Douillet said.Luckily, more members of the community have moved into wealth management, Douillet added, which means it's now easier to find advisors who understand the unique planning needs of the community.A<a href="https://www.ftadviser.com/opinion/2021/03/11/advisers-cannot-afford-to-ignore-lgbt-client-base/"> survey</a> from LGBT Great, an organization which specializes in developing diversity and inclusion in the investment industry, found that 84% of LGBT+ people surveyed said that a financial advisor's LGBT+ credentials mattered to them."As a member of the community, I don't want to pay professionals to give me advice if I have to explain to them why their initial plan doesn't meet my needs or suit my family situation," Douillet said.When doing research and development for Daylight, Simmons heard from members of the community who had financial advisors assume their sexuality and lifestyle when discussing goals."We often hear from gay men, for example. They get asked, 'What does your wife do?,'" Simmons said. "And this doesn't really engender a meaningful relationship with your financial coach or advisor [when] having to do the emotional labour to educate your coach about your lifestyle and goals."Though it's becoming easier to find wealth managers and financial advisors from the community, generating wealth for any person of a diverse background can seem like an uphill battle, Douillet said.<h2>Bettering the <keyword id="35175" type="ORGANIZATION" weightage="60" keywordseo="investing">investing</keyword> profession</h2>One reason it's easier to find more LGBTQ+ wealth managers and more inclusive investing services is the push from large financial institutions and investment houses toward better LGBTQ+ policies and hiring strategies."If you consider that just 15 years ago, few Wall Street banks even had LGBT+ employee resource groups, but now nearly every bank that does business in the US scores a perfect 100 on the HRC's CEI, things have moved by leaps and bounds," Douillet said. The<a href="https://www.hrc.org/resources/corporate-equality-index#report-highlights"> Human Rights Campaign (HRC)</a> completes and provides a yearly corporate equality index, which is a benchmarking tool on corporate policies, practices, and benefits pertinent to LGBTQ+ employees. Companies with a top score of 100 earn the coveted title of "best place to work for LGBTQ equality."Many financial institutions feature on the list including JPMorgan, Bank of America and BlackRock.Douillet said that banks have done particularly well in bringing in an early class of diverse backgrounds. But the mid-tier level is where a lot of people with diverse backgrounds tend to fall out of the pipeline, she added.Douillet thinks this happens because more diverse groups are known to<a href="https://hbr.org/2016/09/diverse-teams-feel-less-comfortable-and-thats-why-they-perform-better?registration=success"> produce better outcomes but face more friction</a>, which can initially create tougher work environments and make the environment less comfortable. "I don't have a really great answer for how to make a difference," Douillet said. "But I think the more you promote people with diverse backgrounds, the better the management's going to be for the organisation, and the better the pipeline is going to be for other people with diverse backgrounds." This isn't only a problem for financial firms. More than 75% of the Nasdaq's companies do not have at least one woman and one under-represented minority or LGBTQ member on the board, according to a Bank of America report on March 2.And only 24% of Fortune 500 director seats are held by openly LGBTQ leaders, which translates to about 0.2%,<a href="https://www.prnewswire.com/news-releases/out-leadership-launches-first-of-its-kind-summit-on-board-diversity-releases-new-research-on-board-diversity-impact-301219765.html"> according to Out Leadership</a>.<h2>Investing in LGBTQ+ equality</h2>But companies that are more inclusive and diverse with their policies and hiring see the pay off.Credit Suisse's index of 350-plus inclusive companies, called the <keyword id="11544591" type="UNKNOWN" weightage="60" keywordseo="lgbt-350">LGBT-350</keyword>, has<a href="https://www.businessinsider.com/stocks-to-buy-cheap-high-quality-lgbt-inclusive-credit-suisse-2020-12"> outperformed the MSCI AC World index since 2010</a>. More broadly, Bank of America found that companies with above-median board gender diversity see 15% higher returns on equity and 50% lower earnings risk one year out compared with less diverse peers.But this is more likely to be correlation rather than causation at play, said Eugene Klerk, Credit Suisse's global head of ESG and lead analyst on LGBT-350."It is difficult to prove that a company that embraces LGBT+ more than one that does not therefore is likely to outperform in terms of financial or share price performance," Klerk said.Still, a more inclusive company is also more likely to be open to additional business ideas and address challenges with a more diverse set of solutions, Klerk said."Plenty of studies have shown that employee engagement translates directly to productivity, so it's not hard to draw the conclusion that creating an environment where all employees feel comfortable being themselves in the workplace will lead to improved business outcomes and a stronger bottom line," Douillet said.More diverse companies have tended to be higher-quality companies, which have performed well in recent years. "One cannot ignore the possibility that it's the quality elements that has provided a level of attractiveness for investors to invest in these companies, rather than necessarily the diversity itself," Klerk said.Yet LGBT Great<a href="https://www.lgbtgreat.com/ANewFrontierReport"> recently reported</a> that 85% of investment professionals from 25 global investment and wealth-management organisations have yet to have an LGBTQ+ investing lens at their firm.And even though LGBTQ+ inclusivity is not currently a mainstream stock valuation metric, the community's ability to vote with their feet could change that.In Europe, there's also an increasing focus on non-financial-disclosure regulation. This would develop a standard and put greater pressure on companies to disclose their social policies, Klerk said.As the relationship between diversity and corporate performance becomes better known, it will drive this forward, Klerk said."You're talking about close to 10% of millennials in the US, for example, that associate themselves or openly identify as LGBT+," Klerk said. "So this is something that from a grassroot level going forward will have a significant impact, particularly on companies that do not openly support LGBT policies. That's probably something that investors need to understand."

The LGBTQ+ community faces a bifurcated experience when it comes to investing. Experts explain where the investment industry is successfully breaking down barriers, and where it's still failing to create equity.

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The LGBTQ+ community faces a bifurcated experience when it comes to investing. Experts explain where the investment industry is successfully breaking down barriers, and where it's still failing to create equity.

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