Seeking financial services is often a hostile experience for LGBTQ individuals. Spark Wealth Advisors, a niche RIA launched last year by openly gay financial advisor Christopher Johns based in Jacksonville, Fla., is working to change that. I’m in.
According to a survey from National Financial Education FundThree in ten LGBTQ people reported experiencing “stigma, discrimination or exclusion by or from organizations or individuals within the financial services sector.”
“Just because you feel uncomfortable doesn’t mean you can’t plan for the future,” says Johns. “We want to make financial planning and financial planners accessible to the entire gay community.” [with whom] They are comfortable discussing their particular situation. ”
The consequences of such exclusion are clear. A recent survey found that LGBTQ Americans are saving less than other groups, feel burdened by debt, and report less confidence in their ability to retire comfortably. Welfare Institute.
Johns, who launched Spark Wealth Advisors as a sole advisory firm last year, said focusing on such niche clients was a concern when starting a business.
“I never want to exclude potential customers, but at the same time I think they are underserved people,” he said.
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Read our conversation with Mr. Johns below. He talks about serving underrepresented populations, launching his independent RIA, and pursuing niche customers with telemedicine. Interviews have been lightly edited for length and clarity.
Financial plan: What inspired you to start your own RIA?
Johns: I’ve worked for several large institutions and felt they didn’t really allow advisors the freedom to support and put their customers first. It was rather about putting the business first.
I have always worked in some area of finance. I was a mortgage banker and then a private banker for Wells Fargo and several other big financial institutions. I went to work for a news agency and didn’t like what I was doing. Then I started working for some credit unions. I worked in the investment services department of my local credit union. i love to do that. It brought us a little closer to our mission to put clients first and not worry so much about profit.
I left my customer-facing role and moved into a regulatory compliance role. However, I was not good at working with clients. That’s what made me want to be independent. could not help the client. I used to do it early in my career, so I decided to go ahead and give it a try.
FP: What made you want to focus on gay men as a niche customer?
Johns: Being gay myself, I think the gay population is underestimated. Gay people, especially gay men, tend to start a little later in life, for a variety of reasons, such as not having a welcoming family or feeling unaccepted by their community. I feel catch up a little. As such, they are underrated.
I hope that changes through the many changes that have happened in the last 6-7 years. However, many people are still reluctant to discuss their situation with a financial advisor. Therefore, we want the gay community at large to have access to financial planning and financial planners who feel comfortable talking about their unique situation.
FP: What financial issues are particularly relevant to gay men as customers?
Johns: I think part of it is that we have unique financial needs, and part of it is that we have people we feel comfortable with and people we have in common. You know, I once saw a guy who served as a Navy fighter pilot. They don’t necessarily have specific financial needs, but they have something in common, and you might understand their way of thinking.
If you are gay, you may have unique medical needs that do not necessarily need to be addressed in the heterosexual community. Blended families can exist even when everyone is close to each other, whether they have been married before, have children and now have a partner, surrogacy, adoption, plans for them, etc. . They are unique challenges. They are not exclusive to the gay community, but they are more common in the gay community.
There is also the real estate planning aspect, which I think is greatly overlooked. Same-sex marriage is now legal, but like other changes, the percentage of people getting married is slowly rising. just a few years ago, [Gallup survey found that] 40% of dating gay men were not yet married. So there are property issues associated with it. How to inherit the partner’s house, take over retirement benefits, etc. are not taken up.
FP: How will your company operate?
Johns: I imagine most are remote. By doing so, it will be available to customers all over the country. I think that has become more acceptable because of the new coronavirus. Speaking to several others who previously worked remotely and are now transitioning to that model, they say their clients don’t necessarily want to go back to in-person meetings. Hopefully that will continue in the future.
We are paid only. No fees are charged. We do not sell commission products of any kind. At this time, we basically charge an average AUM fee of 1%.
One thing we did a little differently is that we don’t have a minimum account amount. We wanted to do this for people who still have growing balances but need access to their financial plans. Therefore, if his assets are less than $250,000, he will be $650 per quarter and will continue to work with him regardless of the amount invested.
FP: What would your ideal client be like to start with?
Johns: You probably have two ideal customers. One of them will be a young professional who is considering adoption or surrogacy or has already had a child.
Another ideal client would be an older gay couple who is comfortable doing financial planning and has never tried it before. Then we can help them transition towards retirement. However, it will mainly be young early to mid-level customers who are about to start a family.
FP: Worried about launching your own RIA or pursuing a niche customer?
Johns: A big concern in doing a specific niche like this is that you don’t want to exclude potential customers, but at the same time, I think it’s an underserved population.
We got a lot of great feedback thanks to other online forums. As you can see, we have posted several times online about going this route and everyone has been very supportive. I hope that is reflected in the client as well.
FP: What was the impetus for this move?
Johns: I used to live in Wilton Manors. I don’t know if you know about Manners, but basically 10 years ago San Francisco was the gay capital of the United States, and now Manners is the gay capital.
When I lived there, I always wanted to start a financial planning firm for gays. Because there is a very large population there. This is something I have always really wanted to do and have been working towards. Unfortunately, time, money, and my career have always gotten in the way.
We were fortunate enough to have some money in the bank and a little more financial stability. We have come to the point of “now or forever.” Seeing the success of people who were working remotely with clients during the Covid-19 crisis was the straw that broke the camel’s back. I thought, “Let’s just give it a try.”
We are in Jacksonville, FL. Before COVID-19, it was like, ‘Okay, let’s start this company. We’re going to do this very specific space. Now everyone is much more accustomed to doing things remotely, which gives us a broader perspective and a larger potential customer pool.
FP: Did the political situation in Florida bother you when you started the RIA?
Johns: No, not necessarily. After all, at least our governor is pro-business. And after all, we are a business.
The state has a very large and active gay population, but they certainly aren’t going anywhere. So my hope is that a lot of the political stuff that’s going on right now is noise and we get away from it.