Making Gays Feel Welcome as Customers

Article excerpt

Until recently, applying for mortgages, checking accounts, and the like was a headache for Kevin C. Patton-Hock and his partner of 20 years, Arthur Patton-Hock.

"In almost every important financial matter we've had, somewhere in the process, someone has been confused about our status, and it eats up our time and it is irritating," said Kevin Patton-Hock.

They didn't experience any awkwardness or intrusiveness, however, when they went to Boston's Wainwright Bank and Trust Co. earlier this year to refinance their home mortgage.

Wainwright has been focusing on the gay and lesbian market for about 15 years. The loan originators there were tactful, and the application went smoothly and quickly, Mr. Patton-Hock said.

"I was amazed that stuff like having our last names changed a few years ago didn't confuse them. The phone calls are always respectful, and I have never been asked questions like, 'Will your wife be at the closing?' "

Todd Sears, who has a primarily gay clientele as a financial adviser for Merrill Lynch & Co. Inc.'s global private-client group, said, "Over all, this market is something that financial services companies as a whole are just starting to wake up to."

The United States has about 15 million gay and lesbian adults, according to Witek-Combs Communications of Washington, a marketing and public relations firm that specializes in the gay and lesbian community.

It used to be thought that gays and lesbians were a largely affluent minority. Experts say it is now generally accepted that they earn no more money than the general public but have more disposable income - about $600 billion of spending power last year, according to Witek-Combs. Seventy-eight percent of gays and lesbians choose to do business with companies that show a commitment to diversity, against 59% of heterosexuals who do so, the firm found.

Prime Access Inc., a New York advertising company, has worked with some of the largest financial companies, including American Express Co. and, more recently, JPMorgan Chase & Co., on marketing campaigns aimed at gays and other urban minorities.

Andy Bagnall, an account supervisor at Prime Access, said: "If a financial services company can meet the unique needs of this space, it would make sense for them to advertise. But it is important to look at the products offered that address gay and lesbian consumers" - home loans, investing and financial planning services, and especially joint-finances-related services.

Christopher Street Financial Inc., a boutique brokerage with about $150 million of assets under management, was founded in 1981 to provide financial planning and brokerage advice to gays and lesbians. About 75% of the New York company's clientele is gay or lesbian.

"It is a specialization that not all financial planners have studied and mastered," said Jennifer Hatch, the managing partner of Christopher Street Financial.

For example, she said, "Estate planning is considerably different for gay and lesbian couples."

She said that in many cases a punitive tax of 15% can apply to assets that do not pass in a linear fashion to blood relatives. And estates of nonmarried couples are frequently contested, Ms. Hatch said, so the focus of estate planning might be on setting up trusts and limited liability corporations, which are easier to control.

Term life insurance is another important product for this audience, since it is often needed to pay for estate taxes, she said.

American Express has been advertising its travel and financial services to gays and lesbians and actively recruiting gay and lesbian employees since the early 1990s. Three hundred to 400 of its 10,000 financial advisers focus on the gay and lesbian community.

"When we identify you as a nontraditional couple, the computer-generated portion of the plan would recognize that" and would help in the computation of estate planning and taxation and hence in tailoring advice, said James Law, a senior financial adviser at American Express. …