LGBTQ clients worry more about retirement but take more risks

Pre-retirees from the LGBTQ community have a strong desire to protect their retirement savings but are more likely to take investment risks according to a recent study.

US insurance and financial firm MassMutual surveyed 315 LGBTQ respondents including 149 pre-retirees and 166 retirees; pre-retirees had household incomes of at least $40,000 and retired respondents had at least $100,000 in investable assets.

The survey revealed that they are more likely to say they should become more conservative with their money as they approach retirement (42%) than to maintain a more aggressive investment strategy (28%).

But 65% of LGBTQ respondents describe their investment mix as growth- rather than preservation-oriented compared to 52% of the general population; and 31% acknowledge that they may be taking more risk than they should, compared to 22 percent of other retirees and pre-retirees.

Opportunity for advisors
The study shows that there is a clear untapped market for financial advisors with less than half of LGBTQ respondents saying they currently work with an advisor.

"Of those respondents in our study who do work with a financial advisor, six in 10 say their advisor has encouraged them to change their investment mix and 87% of those folks were advised to become more conservative as they enter retirement," said Catherine Cannon, Head of Personal Markets at MassMutual.

The study found that overall, LGBTQ respondents plan to retire later than the general population (with 22 years in retirement vs. 24) while both LGBTQ and others said their retirement savings should last 25 years.

Concerned about market volatility
MassMutual’s research also found that 74% of LGBTQ respondents expressed concern about market volatility (27% "very concerned") while the general population is somewhat less concerned at 72% (21% "very concerned").

However, LGBTQ respondents indicate greater comfort in taking investment risk with only 20% willing to accept "below average" or "low investment returns" in exchange for greater safety, according to the study. Overall, respondents seem to seek a balance between growth and preservation.

"The LGBTQ community's sentiments about investment risk – especially just before and just into retirement – are well-founded," Cannon said. "With some professional investment assistance and a more disciplined approach, LGBTQ retirees and pre-retirees may become even more comfortable in their retirement."