Targeting the pink dollar

Financial services organisations are increasingly focussing their efforts on attract-ing the ‘pink dollar’.

Financial services organisations are increasingly focussing their efforts on attract-ing the ‘pink dollar’.

Darwin-based Godfrey Pembroke financial planner Sue van-Cuylenburg says her client base is composed of people from all walks of life. So when asking a first time client the details of her financial affairs a few years back, she did not ask this client whether or not she had a husband. Rather, she asked about her partner — a move that has ensured that the client, and her female partner, remain customers of van-Cuylenburg to this day.

The lesbian market now constitutes a “proportionately large” percentage of her cli-ents. She attributes this to being “sensitive” in all of her client interviews, and says being a financial planner is about making your clients feel comfortable talking about their lifestyles, just as much as it is about giving financial advice.

Earlier this year, Mark Grady established Sydney-based Gay Financial Manage-ment to cater specifically for the gay and lesbian market. The group has been oper-ating for about six months but was officially launched on 4 September at the Gay and Lesbian Expo.

Grady, who is general manager of the organisation, says Gay Financial Manage-ment offer the same services as any other planning group — mortgage lending, fi-nancial planning, insurance and risk management and business management — with one key difference.

“We provide the gay and lesbian community with a company and service that un-derstands their lifestyle and their financial needs. We are managed, owned and staffed by gay people for gay people. Our clients don’t have to put up a facade, which is important,” he says.

Grady describes the gay and lesbian market as a “sleeping” one which is not neces-sarily adequately served by many mainstream financial services organisations.

“The gay and lesbian market is the same as the mainstream market in that they use the same products. The only difference is the service. Gays and lesbians need to feel comfortable about their lifestyles and that is what is lacking,” he says.

Both van-Cuylenburg and Grady see gays and lesbians as a highly affluent market.

“I’ve tended to find the lesbian clients I have predominantly haven’t got any kids, are living together and are high income earners. They have a high level of assets when they first seek financial planning advice. They’re in their 30s and 40s and they’ve usually already paid off their house,” van-Cuylenburg says.

Mark Grady agrees. “It’s a professional market, quite often double income with no dependents,” he says.

Ian Johnson is a principal consultant at Significant Others Marketing Consultants, a group which specialises in providing marketing services to companies and organi-sations wishing to reach the gay and lesbian market. Significant Others publish a quarterly gay and lesbian marketing report called Outlook.

Johnson agrees gays and lesbians are an affluent market, comprising a high level of ABs.

“Based on estimates, the gay and lesbian market is just under one million people in Australia. In the 1998 calender year, gay and lesbians earned in excess of $30 bil-lion dollars in pre-tax income,” he says.

Johnson sees this market spreading across all age groups and living within the cit-ies, agglomerating in the inner city as opposed to the suburbs. Not all gays and les-bians are ‘out’ and are therefore difficult to target.

Significant Others has identified a ‘reachable’ market, however, made up of those who read the gay and lesbian print media.

Significant Others has conducted a dozen readership analyses, which show the core readership of gay and lesbian media are aged between 25 and 44.

A 1998 Significant Others and Sydney Star Observer Readership Survey provides a breakdown sample of this gay and lesbian market in New South Wales. The av-erage respondent to the survey earned $48,482 per annum before tax. In the same survey, 37.3 per cent of the sample identified themselves as being employed in a professional occupation and were tertiary qualified. Business owners/consultants comprised 10.9 per cent of the sample, while 9.7 per cent were employed in man-agement roles. When it came to senior management, 5.4 per cent of all respondents identified themselves in this category.

It is therefore quite understandable that financial services organisations would want to target this market.

Johnson says the amount of dollars spent on advertising to this market has grown, with the fastest growing sector targeting gays and lesbians being banking and fi-nance.

Companies such as Aussie Home Loans, Macquarie Equities, E*Trade, ANZ, Westpac and Sanford Securities are all increasingly focussing their marketing ef-forts on gays and lesbians. So much so, that the September edition of Outlook has included a special report on the banking and finance sector, including a breakdown of quantitative data on gay and lesbian credit card holdings, mortgages and income levels for those wishing to target this market.

“In the next two years, we expect every bank to be targeting this market,” Johnson says.

However, parts of the gay and lesbian market have felt understandably alienated by mainstream financial services.

Today, though members of superannuation funds are able to nominate their own beneficiaries, the trustee holds final sway if this beneficiary is contested in the event of the death of the fund member. This means the family of a deceased fund member can contest the payment of superannuation benefits to the deceased mem-ber’s partner, since Federal law does not recognise same sex partners as a spouse.

Anthony Albanese, an Australian Labor Party member of Federal Parliament, has been trying to introduce legislation recognising same sex couple for superannua-tion purposes, with no success to date.

(The Property (Relationships) Legislation Amendment Bill 1999 in New South Wales now recognises same sex couples in relation to property settlements, how-ever this does not relate to superannuation.)

Conversely, it is this level of discrimination which financial organisations can turn to their advantage in targeting gays and lesbians, says Johnson.

“While the legislation is discriminatory, it can be viewed as an opportunity for those companies that are able to maximise the likelihood of a same sex beneficiary receiving the benefit. Likewise, there is opportunity for those organisations that differentiate themselves from the market,” Johnson says.

Sydney-based G & L Insurance Brokers was established in 1992, first licensed as multi-agents, and then as life agents. The organisation offers both general as well as life and risk insurance which specifically targets gays and lesbians.

G & L Insurance Brokers’ managing director Mark Jenkinson says gay men in particular had difficulties in the early to mid 1990s obtaining life insurance because of the HIV virus, though he says things have improved since this time.

“Initially, life insurance companies put in rather stringent rules in relation to this. The US life industry suffered quite severely from HIV during this time, but the HIV factor never hit Australian life companies like in the US,” Jenkinson says.

G & L Insurance Brokers distributes its products directly, with clients approaching the group rather than buying its products through financial planners. Unlike Gay Financial Management’s Grady, who says “targeting the pink dollar myth is just that, a myth”, Jenkinson believes the gay and lesbian market is a growing niche market which will remain separate from the mainstream.

“Our interests and finances are generally quite different,” he says.

Though acceptance of gays and lesbians is increasing, and the number ‘outing’ themselves is growing, dealing with this market may also mean understanding a client’s need for discretion.

“Even though people are ‘out’ as such, they may not be ‘out’ at work, for example” Jenkinson says.

In part a response to this need for discretion, a new US-based Internet bank is about to open shop.