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Windsor Ruling on DOMA Creates Opportunities for Advisors

A new study from the Insured Retirement Institute (IRI) looks at the changing retirement strategies of same-gender couples in the wake of the Supreme Court’s Windsor decision earlier this year. That decision led to the IRS and DOL adopting a uniform definition of “spouse” that includes legally married, same-gender couples, regardless of their current state of residence — effectively expanding pension rights for millions nationwide.
 
Given this new reality, financial advisors should recognize the potential for doing business assisting these couples with retirement planning. Engaging lesbian, gay, bisexual or transgender (LGBT) clients and communicating support for the LGBT community at such a critical time could be highly advantageous for several reasons.
 
IRI’s survey shows that same-gender couples are highly educated, highly employed and have median annual incomes approximately $20,000 higher than opposite-gender couples, data that are supported by a different survey from Prudential earlier this year. Since the Windsor ruling in July, 53% of same-gender married respondents to the IRI study say they have already taken affirmative steps to incorporate their spouses into their DB plans (or vice versa). In addition:

• 38% have made changes to their wills or plan to do so; and
• nearly half of unmarried same-gender couples are now planning to marry.
 
Despite taking those steps to capitalize on the changing legal definition of marriage, 86% of respondents in same-gender couples admit requiring help with financial matters, but 65% currently do not use a financial planner. Furthermore, 70% are not fully confident that they can afford to live comfortably in retirement. The opportunity exists to serve this changing market and do so for a long time — 61% of respondents who use a financial planner have done so for five years or longer.
 
Food for thought: 78% of LGBT business decision makers say knowing that a company is LGBT-friendly or LGBT-owned influences their decision to become a customer, and 76% say they are likely to stop purchasing from a company that is perceived to be LGBT-unfriendly, according to Community Marketing, Inc., a San Francisco-based LGBT market research and communications firm.
 
All of this evidence suggests an emerging demographic, newly empowered to protect its retirement and likely to be very loyal to those who help them.
 
Ray Harmon, Esq. is Government Affairs Counsel for ASPPA.

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