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Financial Adviser Specialty: Gay and Lesbian Clients

In recent years, there has been an explosion in the number of credentials financial advisers use to market their services to clients. Add one more to the mix. The Accredited Domestic Partnership Advisor (ADPA) program.

Created about three years ago, this program seeks to educate financial advisers on “the unique needs of clients” who are LGBT, an acronym that stands for lesbian, gay, bisexual, and transgender.

According to a recent survey by Wells Fargo Advisors, which helped design the program, 61% of those who are LGBT say they are confident they will be able to save enough to afford the retirement lifestyle they desire, versus 53% of the general population. Still, there is a “disconnect” between that confidence level and the actual savings LGBT individuals have amassed, says Kyle Young a financial adviser and vice president at Wells Fargo Advisors.

Indeed, the median amount LGBT individuals have saved is only 17% of the $900,000 they believe they will need.

For LGBT individuals, saving for retirement is even more critical than it is for heterosexual, married couples, Mr. Young says. That’s because although LGBT individuals are able to legally marry in several states, they are not able to inherit one another’s Social Security and may not be able to inherit a  defined benefit pension benefit. Nor are they able to pass unlimited assets to one another free of gift and estate taxes. Yet another potential problem: Fewer LGBT couples have children to help them in their old age, making long-term-care insurance even more critical.

The net effect, says Mr. Young, is that “the cost of living for a LGTB couple is far greater than for a heterosexual couple.” Perhaps as a result, the LGBT respondents to the Wells Fargo survey project they will need $900,000 to retire, versus $300,000 for heterosexual couples, he adds.

If you are LGBT, should you seek out one of the 200-or-so financial advisers nationwide–many of whom work for Wells Fargo–who have earned an Accredited Domestic Partnership Advisor (ADPA) designation? Not necessarily. Many financial advisers should have the expertise in subjects including insurance and gift and estate taxes to be able to help a LGBT individual or couple plan for the future.  But if you don’t have an adviser you like–or if you don’t think your current adviser is sensitive to the financial risks you and your partner face–you might consider it.

To earn an ADPA designation, an adviser must have one of ten well-established credentials. These include the certified public accountant, chartered financial analyst, and certified financial planner designations that each require a rigorous course of study, as well as continuing education and adherence to codes of ethics. The ADPA, which was created by Wells Fargo in partnership with the well-respected College for Financial Planning, requires four additional courses and a passing grade on a multiple choice exam.

Advisers with the designation learn how to help couples insure themselves against the potential loss of a spouse’s Social Security or other benefits. They are also schooled in gifting strategies to enable couples with unequal wealth ensure the survivor has adequate financial resources.

Be aware that not all financial designations are equal. According to an article by my colleagues Jason Zweig and Mary Pilon:

“In recent years the number of financial credentials has soared. According to the Financial Industry Regulatory Authority, which oversees how investments are marketed to the public, there are at least 95 different professional designations for financial advisers—nearly double the 48 it listed in 2005. Many newer credentials, however, require comparatively little effort on the part of the students.” Moreover, the article adds, “The Wall Street Journal has found at least 115 others that aren’t tracked by Finra.”


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About Encore

  • Encore examines the changing nature of retirement, from new rules and guidelines for financial security to the shifting identities and priorities of today’s retirees. The blog also explores news that affects retirement, from the Wall Street Journal Digital Network and around the web. Lead bloggers are reporter Catey Hill and senior editor Jeremy Olshan. Other contributors include The Wall Street Journal’s retirement columnists Glenn Ruffenach and Anne Tergesen; the Director for the Center for Retirement Research at Boston College, Alicia Munnell; and the Director of Research for Pinnacle Advisory Group, Michael Kitces, CFP.