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For financial services institutions, the LGBTQ+ community presents a wealth of opportunity to capitalize on its growing buying power and, equally important, to address the unique challenges this community faces in growing and maintaining financial security.

In aggregate, the LGBTQ+ community wields almost $1.4 trillion in spending power.1 As with all averages, this figure is inflated by some extreme wealth, while at the same time, a deeper dive into the data reveals a highly mixed picture of LGBTQ+ financial well-being. Recent surveys of LGBTQ+ Americans reveal that:

  • 61% of respondents live paycheck to paycheck.2
  • 39% feel the quality of their financial life is worse than they expected.3
  • 72% have a high amount of financial stress on a daily or weekly basis.4

By tailoring your approach to address the unique financial challenges, needs, and opportunities of the LGBTQ+ community, banks and lenders can contribute meaningfully to reducing financial disparities and fostering LGBTQ+ economic empowerment. Recognizing the community’s specific needs enables financial institutions to build long-term relationships and to contribute to the economic empowerment of this community, while capitalizing on this share of the market.



Engaging Respectfully with Your LGBTQ+ Customers

Providing quality client engagement means treating all clients with respect and understanding their unique circumstances. Helpful tips to best serve LGBTQ+ consumers (as well as other diverse client groups) include:

Check your assumptions and ask general questions. Chitchat is part of client engagement and a great opportunity to learn more about your customers’ needs and priorities. Ensure inclusive and positive engagement at the outset. Remember that “innocent” assumptions, like asking a woman about a husband, can turn off clients, both LGBTQ+ and non. There are multiple ways for people to build families; because of this, last names may vary within the same family, which is a trend that is increasingly common across the board.

Ensure that you use the correct pronouns when referring to your client, their spouse or partner, and their dependents. It’s important not to assume someone’s pronouns based on name, appearance, or other characteristics. When introducing yourself or in email/ business card signatures, including your own pronouns, can support this clarity. Whether engaging in multicultural communication or with gender-neutral names, normalizing quick pronoun sharing can support a range of inclusive client interactions.

When reviewing credit history, whether because of a gender transition, taking on a married name, or other life circumstances, your clients may need to disclose instances where they went by a different name. In all communications, ensure that you are using their indicated name and respectfully asking about any prior names, explaining the use and confidentiality of these credit reviews. This can be accomplished by having a standard step for all clients in which you proactively walk them through the review process, noting how and why prior names will be examined and referred to in the context of lending and banking.



Here are 3 critical insights and steps you can take to better serve your LGBTQ+ customers.

What to Know

1. The LGBTQ+ community lacks consistent federal civil rights protections in key areas.

Despite financial services being one of the most heavily regulated US sectors, LGBTQ+ Americans don’t enjoy consistent federal civil rights protections as do other groups with respect to credit, employment, housing, public accommodations, and other key areas. In 2021, under the Biden administration, the Consumer Financial Protection Bureau (CFPB) issued guidance5 clarifying that it is illegal for lenders to discriminate based on sexual orientation or gender identity (SOGI).6 But until the Equality Act7 or similar legislation is passed, the protections for the LGBTQ+ community provided by the interim CFPB guidance can be revoked by a change in administration. LGBTQ+ rights are also under attack nationwide. 2023 set a record for anti-LGBTQ+ legislation, which 2024 is well on pace to surpass with more than 480 pieces of anti-LGBTQ+ legislation already introduced in US state legislatures as of the publishing of this article.8

2. Understanding the challenges specific to the LGBTQ+ community, and ensuring inclusive financial services is critical to promoting LGBTQ+ financial well-being.

LGBTQ+ people—especially LGBTQ+ people of color, who experience the intersectional impact of racial and financial bias—face obstacles,9 financial bias,10 and discrimination11 that complicate managing personal finances12 in ways that cisgender and heterosexual consumers don’t. LGBTQ+ employees also report significantly lower annual household income13 than the general population, and nearly one-third of transgender Americans live in poverty.14 Medical debt is a leading cause of bankruptcy15 in the United States: 35% of LGBTQ+ Americans who have employer-sponsored health insurance aren’t able to cover their partner, 9% say their employer only covers married couples, 15% say their employer doesn’t provide partner coverage, and 8% say their employer doesn’t provide same-sex partner coverage.16

3. LGBTQ+ Americans are less likely to have high credit scores.

While attitudes toward LGBTQ+ people have improved up to a point, due to both legacy and current discrimination, inequitable cisgender and heteronormative policies and attitudes persist across the financial services sector and beyond.17 The LGBTQ+ community is younger than the general population.18 There’s an LGBTQ+ wage gap, with LGBTQ+ employees earning ninety cents for every dollar their non-LGBTQ+ peers make, and LGBTQ+ households are 1.25 times more likely to be unbanked or underbanked than non-LGBTQ+ households.19 Younger LGBTQ+ people also often lose family financial support after they come out, forcing them to rely more heavily on credit cards to cover costs for things like gender-affirming care, and other out-of-pocket expenses such as legal fees for services to codify additional family and estate protections, including parentage security. Also, transgender people often change their legal name as part of the transition process. These factors have a negative impact on LGBTQ+ credit scores, creating yet another barrier to building and accessing credit.

What to Do

1. Ensure your institution follows nondiscriminatory lending practices to guarantee fair access to financial services for everyone, regardless of sexual orientation or gender identity. Rigorously enforce lending policies that are explicitly inclusive and account for the unique circumstances a customer’s gender identity or sexual orientation may present.

2. Adapt your credit assessment processes to account for the impact of legal and social inequities affecting the LGBTQ+ community that may have adversely affected their credit score. For instance, allow a transgender loan applicant the opportunity to explain why portions of their credit report reference a different name.

3. Implement comprehensive training programs for all staff, focusing on diversity and inclusion with a specific emphasis on understanding the unique financial needs and challenges faced by the LGBTQ+ community. Invest in financial literacy initiatives specifically designed for the LGBTQ+ community, aiming to empower them with the knowledge and skills needed to achieve financial independence and security.

4. Offer products and services specifically targeting LGBTQ+ needs, such as personal loans to cover the costs of gender-affirming care or costs associated with nontraditional family formation, such as adoption or surrogacy. Consider offering credit and debit cards in the vein of the True Name® initiative, which allows customers to choose the first name that appears on their cards.

5. Partner with LGBTQ+ organizations to enhance outreach and education efforts, providing resources that are relevant and beneficial to the LGBTQ+ community. Actively engage with the LGBTQ+ community to better understand their financial needs and build a foundation of trust and support.

6. Establish robust mechanisms for gathering and analyzing feedback from LGBTQ+ customers to continually refine and improve services, ensuring they remain relevant, supportive, and accessible to the community. Give your customers the option to self-identify as LGBTQ+ in surveys alongside other key demographic data, and leverage those data crosswalks to adapt and improve current practices.

7. A final, meaningful way your institution can support LGBTQ+ financial well-being is to publicly advocate for LGBTQ+ rights. Due to inconsistent federal-level protections, LGBTQ+ people are increasingly vulnerable to the vagaries of state-level legislation, causing individuals to feel less safe in their home states, often relocating as a result.

Out & Equal’s, 2024 report, Talent on the Move—Where Do We Go From Here?, found that 45% of survey respondents feel less safe in their state of residence due to changes in LGBTQ+ rights. The report also revealed that nearly 4 out of 5 (79%) respondents believe that anti-LGBTQ+ laws affect whether they would relocate for a new job, and nearly 3 in 4 (72%) feel that their companies did not respond sufficiently to such legislation, indicating an emergence of distrust and a gap between corporate policy and the expectations or needs of LGBTQ+ and allied employees.

Embracing inclusivity not only benefits the bottom line but also aligns with ethical and social responsibility imperatives, ultimately creating a more equitable and prosperous financial landscape for all. Join the public conversation, and use your corporate voice to support LGBTQ+ rights and foster goodwill among consumers for years to come.



Read more from our financial capability and empowerment series:

4 Things LGBTQ+ People Should Know and Do to Improve Their Financial Well-Being
3 Things Employers Should Know and Do to Improve the Financial Well-Being of Their Company and LGBTQ+ Employees

The Equality Act Fast Facts

What Is the Equality Act?
The Equality Act is a U.S. Congressional bill that aims to expand LGBTQ+ protection from discrimination on the basis of sexual orientation or gender identity by strengthening existing antidiscrimination laws in key areas, notably consumer lending, which the Equal Credit Opportunity Act (ECOA) does not currently provide.

Why Does the Equality Act Matter?
Today, for instance, if an LGBTQ+ couple applies for a mortgage or a transgender person applies for an auto loan, even if an applicant otherwise qualifies, a lender can deny the loan based solely on the applicants’ actual or perceived sexual orientation or gender identity. If passed, the Equality Act would make this illegal by adding sexual orientation and gender identity to the list of protected statuses (e.g., race, color, religion, national origin, marital status, age) included under the ECOA.

What’s the Status of the Equality Act Today?
The Equality Act, originally introduced to Congress in 2015, has been evolving in the years since, and different iterations have been introduced to subsequent Congresses for consideration. The most recent version, House Resolution 15 (H.R. 15), was introduced in June 2023. Most bills undergo debate in committee before being brought up for vote. As of this writing, H.R. 15 remains in committee. According to the nonpartisan Public Religion Research Institute (PRRI), more than 70% of Americans support the passage of a bill like the Equality Act. The Equality Act has also been endorsed by more than 550 major businesses through the Business Coalition for the Equality Act.

What Do I Do If I Feel I’ve Been Discriminated Against by a Financial Institution?
In 2021, the Federal Reserve’s Consumer Financial Protection Bureau (CFPB) issued temporary guidance to the financial services industry that it will not tolerate discrimination on the basis of sexual orientation or gender identity. Whether applying for a credit card or loan (e.g., home, auto, student) or trying to open a checking or savings account, LGBTQ+ people who feel a financial institution has discriminated against them can submit a complaint to the CFPB or their state’s consumer protection office.

For more information, see What You Need to Know About the Equality Act.

Sources

  1. Why Are There Gaps in LGBTQ+ Homeownership?, Urban Institute, November 2023. ↩︎
  2. “Nearly 1 in 3 LGBTQIA+ Respondents Say They’ve Experienced Discrimination, Bias in Financial Services,” National Endowment for Financial Services, June 24, 2022. ↩︎
  3. Ibid ↩︎
  4. The State of LGBTQ Finance: A Survey of 2,000 Americans, Motley Fool Foundation and Debt Free Guys, September 28, 2024. ↩︎
  5. “CFPB Clarifies That Discrimination by Lenders on the Basis of Sexual Orientation or Gender Identity Is Illegal,” Consumer Finance Protection Bureau, March 9, 2021. ↩︎
  6. Ibid ↩︎
  7. “The Equality Act,” the Human Rights Commission. ↩︎
  8. Talent on the Move—Where Do We Go From Here?, Out and Equal, March 2024. ↩︎
  9. “These 3 unique challenges have an ‘overarching effect’ on LGBTQ+ people’s finances,” CNBC, June 30, 2023 ↩︎
  10. “Nearly 1 in 3 LGBTQIA+ Respondents Say They’ve Experienced Discrimination, Bias in Financial Services,” National Endowment for Financial Education, June 24, 2022. ↩︎
  11. Discrimination and Barriers to Well-Being: The State of the LGBTQ+ Community in 2022, Center for American Progress, January 12, 2023. ↩︎
  12. “An overview of the unique financial challenges LGBTQ+ people continue to face,” Investopedia, August 21, 2023. ↩︎
  13. Understanding the Financial Lives of LGBTQI+ People in the United States, Center for LGBTQ Economic Advancement and Research and Movement Advancement Project, March 2023. ↩︎
  14. LGBT Poverty in the United States: A Study of Differences Between Sexual Orientation and Gender Identity Groups, UCLA School of Law Williams Institute, October 2019. ↩︎
  15. “States confront medical debt that’s bankrupting millions,” Associated Press, April 12, 2023. ↩︎
  16. “Access to Employer-Sponsored Health Coverage for Same-Sex Spouses: 2020 Update,” KFF, November 30, 2020. ↩︎
  17. “LGBTQ+ Credit Barriers: Why They Exist and How to Avoid Them,” Investopedia, June 25, 2023. ↩︎
  18. Three Trends in LGBTQ+ Homeownership Gaps Underscore Research and Policy Needs, Urban Institute, February 28, 2024. ↩︎
  19. The Wage Gap Among LGBTQ+ Workers in the United States, Human Rights Campaign, July 2021. ↩︎

OUR VISION

Global workplaces where all people are equal, belong, and thrive.

OUR MISSION

Out & Equal is the global convener, thought leader and catalyst actively working to achieve workplaces of equality and belonging - supporting LGBTQ+ employees and leaders who thrive in their careers and lives and achieve greater impact on the world.