February 21, 2024

For LGBTQ people, seeking financial services can often be a hostile experience. Spark Wealth Advisors, a niche RIA founded last year by Christopher Johns, an openly gay financial advisor in Jacksonville, Fla., is trying to change that.

according to research National Foundation for Financial Educationthree in 10 LGBTQ individuals reported experiencing “prejudice, discrimination or exclusion from organizations or individuals within the financial services industry”.

“Feeling uncomfortable shouldn’t be a reason not to plan for the future,” Johns said. “I’d like to see the gay community as a whole have access to financial planning and financial planners (with whom) they can easily discuss their unique situation.”

The consequences of this exclusion are obvious. LGBTQ Americans say they have less savings, feel more debt-burdened than other groups, and are less confident about their ability to retire comfortably. Institute for Employee Benefits.

Johns, who founded Spark Wealth Advisors last year as an independent advisory firm, said focusing on such niche clients was a concern in the beginning.

“You never want to ostracize potential customers, but at the same time, I do think it’s an underserved demographic,” he said.

read more: Are Christian Donor Advised Funds Pushing Anti-LGBTQ Politics?

Read our conversation below with Johns about serving underrepresented populations, starting an independent RIA, and finding niche clients with a remote practice. The interview has been lightly edited for length and clarity.

Financial plan: What motivated you to start your own RIA?

Johns: I’ve worked at several larger agencies and I don’t think they really allow consultants the freedom to help their clients and put the client first. It’s more about putting business first.

I have always worked in some aspect of finance. I was a mortgage banker and then a personal banker for Wells Fargo and several other larger institutions. I went to work in a wire factory, but I didn’t like what I did. Then I started working for several credit unions. I work in the investment services department of a local credit union. I love doing it. This is closer to our mission of putting customers first and not worrying too much about profits.

I left a client-facing role and moved into a compliance role where I was responsible for regulatory compliance. But I miss working with clients. That’s why I want to be independent. I miss helping clients. I did this earlier in my career, so I decided to give it a go.

FP: What made you decide to target gay men as a niche clientele?

Johns: As a gay man, I think it’s an underrepresented group. I think for a lot of different reasons, whether it’s not having a family that accepts you or feeling like you’re not accepted in your community, gay people, especially gay men, tend to start life later, to have a bit of catching up. Therefore, they are underrepresented.

Hopefully through the changes of many things that have happened over the past six or seven years, that will change. However, there is still a significant portion of people who are reluctant to discuss their situation with a financial advisor. So I’d like to see the entire gay community have access to financial planning and financial planners with whom they can easily discuss their unique circumstances.

FP: What financial issues are of particular relevance to gay male clients?

Johns: I would say part of it is having unique financial needs and part of it is having someone you feel comfortable with or have something in common with. You know, I met a guy who served as a Navy fighter pilot. They don’t necessarily have specific financial needs, but they have something in common and maybe you understand their way of thinking.

For homosexuals, there may be unique healthcare needs that the heterosexual community does not necessarily need to meet. There can be blended families where you’ve been married before, had kids, have a partner now, but you’re all close to each other – surrogacy, adoption and planning for those things. These are unique challenges. They are not unique to the gay community, but are more common among them.

I think there is also an aspect of estate planning that is overlooked. While same-sex marriage is now legal, like other things changing, the percentage of people getting married is slowly rising. Just a few years ago (Gallup Survey found) 40% of gay men in a relationship are still unmarried. So there’s the legacy issue associated with that. Things like how you inherit your partner’s house or take over their retirement benefits aren’t addressed.

FP: How will your company operate?

Johns: I expect to be remote most of the time. This allows us to serve customers all over the country. I think that’s become more acceptable because of COVID-19. Talking to some others who previously worked remotely and have now adopted this model, they said their clients don’t necessarily want to go back to face-to-face meetings. Hope this keeps going.

We are only charged. We do not charge commissions of any kind. We do not sell commission products of any kind. Currently, we only charge an average AUM fee, which is basically 1%.

One of the things we do a little bit differently is we don’t have account minimums. We want to do this for those who may still be adding to their balance but still need to do financial planning. So if you have less than $250,000 in assets, it’s $650 per quarter, and no matter how much you need to invest, we’ll still work with you.

FP: What would your ideal client look like for you just starting out?

Johns: There may be two ideal clients. One of them will be young professionals who are either considering adoption or surrogacy or already have children.

Then another ideal client might be an older gay couple who haven’t sought out financial planning because they’ve never felt comfortable doing so. Then we can help them transition into retirement. I would say, though, that for the most part, it’s probably early to mid-level, younger clients looking to start a family.

FP: Are you worried about starting your own RIA or going after niche clients?

Johns: A huge problem with doing such a specific niche is that you don’t want to ostracize potential customers, but at the same time, I do think it’s an underserved demographic.

We got a lot of great feedback thanks to some other online forums. You know, we’ve posted online several times about going this route, and everyone has been very supportive. Hope this translates to customers too.

FP: What is the impetus for this move?

Johns: I used to live in Wilton Manors. I don’t know if you’re familiar with Manos, but it’s basically like, ten years ago San Francisco was the gay capital of America, and Manos is the gay capital now.

When I lived there, I always wanted to start a gay financial planning business because of the large population there. That’s always been something I really wanted to do and work on. Unfortunately, time, money and my career always got in the way.

We are lucky to have a little money in the bank and to be financially stable. We’ve reached the “now or never” point. I think seeing the success of people working remotely with clients during COVID was the straw that broke the camel’s back. We thought, “Let’s get on with this thing.”

We are in Jacksonville, Florida. Before COVID, people were like, “Okay, we’re going to start this company. We’re going to do this very specific niche. We’re going to have a team of maybe 100 people.” Now, as everyone gets more used to Doing things remotely, this expands your horizons and gives you a larger potential client base.

FP: Did you consider the political situation in Florida when starting your RIA?

Johns: No, not necessarily. At the end of the day, at least our governor is pro-business. At the end of the day, we are one business.

The state has a large active gay population and they sure as hell aren’t going anywhere. So, I hope a lot of the political stuff going on right now is just more noise and we’ll get rid of it.