BlackRock, the global investment management firm, recently released its Investor Pulse survey and some of its findings tell an interesting tale about the LGBT community and investing. The survey, which assessed the savings and investing attitudes of over 200 LGBT respondents, revealed for the first time the financial outlook of our community in the U.K.
One of the key takeaways from the Investor Pulse survey is that LGBT women are less confident and optimistic regarding their finances and saving for the future as compared to LGBT men. A press release issued by Black Rock states: “… LGBT women are less positive about their financial future compared to the rest of the population and over half of LGBT men (55%) feel positive about their finances, compared to only 40% of LGBT women. In preparing for retirement, six in 10 (58%) LGBT men indicated that they have started saving specifically for retirement compared with under half of LGBT women (47%).”
In addition, when the survey looked at non-LGBT respondents, “…the 45-54 age group feel least positive about their financial futures, while millennials and retirees feel at their most positive. However, the same phenomenon does not occur within the LGBT community. Here, those aged 45-54 are the most positive about their financial future whereas younger and older LGBTs feel less positive. This is likely to represent a ‘squeezed middle’, as four in 10 (37%) non-LGBTs have financially dependent children compared to two in 10 (21%) LGBTs. Clearly, this picture is expected to change over time as more and more LGBTs choose to have children and take on the financial impact that children have on the household purse strings.”
The survey also found that LGBT men approach their investments in a more balanced manner: “Outside of a pension, cash makes up 63% of savings and investments held by LGBT people, marginally lower than the amount non-LGBTs allocate (67%). However, there is a distinct gap between LGBT men and women. The men’s portfolios consist of 57% cash, leading the way for the most diversified group. Conversely, the proportion of savings and investments held in cash rises to over three quarters (76%) for women. This compares to 73% held by non-LGBT women, making LGBT women the most concentrated in cash. LGBT women are the least likely to take on risk to achieve higher returns (6%).”
The press release also confirms that the LGBT community has serious concerns about future retirement. “Almost half of LGBTs (46%) are concerned about outliving their savings in retirement and the same percentage claim to find retirement planning confusing. Almost six in ten (58%) are concerned that the state pension will be not be sufficient to meet their future retirement income needs, yet the majority of LGBTs haven’t started to save towards retirement.”
And one of the biggest problems the survey unveiled is that seemingly everyone is underestimating how much money will be needed for retirement. For example, LGBT survey takers hoped that they would on average have an annual household income of £22,000 during retirement. But the survey results states that “both LGBTs and non-LGBTs fail to understand the retirement pot they need to grow to meet their income expectations. LGBTs think that a pot worth £194k will be sufficient to meet the income they want in retirement. In fact, the pot they need is closer to £665k, triple that amount.”
Alex Hoctor-Duncan, Savings and Investment Expert and Sponsor of the OUT Network, which is the LGBT Employee Network at BlackRock, analyzed the findings and feels LGBT men are much better at financial investing than non-LGBT men. “When it comes to cash, we could all learn something from LGBT men. LGBT men hold just over half of their savings and investments in cash compared to the 67% held by the average Brit. This makes them the most diversified when it comes to managing their money.”
He also believes that the time to get your finances in order is right now. Alex stated: “Interest rates are set to remain at historic lows after the Bank of England cut its benchmark rate from 0.5% to just 0.25%, so savers really do need to question just how much cash they have sat in their bank account and whether it’s working hard enough to meet the income goals they want in later life.”