Wall Street Targets Gay Couples

06/13/2013 12:36 pm ET Updated Feb 02, 2016

Don't look now, but advisors and brokers are ratcheting up efforts to manage financial affairs for same-sex couples. Looming Supreme Court decisions heighten the attention as gays and lesbians rapidly make gains at the national level. The big banks rightly see our community as a robust niche market, practically salivating at the opportunity to address the challenges of managing our retirement money. But we have always been a resourceful, innovative community, so let's keep our earnings in our own hands.

Over our 38 years as a gay couple, we've discovered and implemented basic low-cost retirement-saving techniques. At first, retirement savings was the last thing on our minds: We were hopelessly in love at ages 27 and 33. Back in 1975 we shared a few pieces of furniture and had a couple hundred in the bank, with two paid-for beat-up Bugs parked at the curb. One of us was a veteran whose sequence of dead-end minimum-wage jobs led to a return to college in his late 20s, while the other just eked by as a starving grad student.

Our first savings turned out to be rip-off annuity contracts from big insurance companies. We then invested heavily in the '90s tech craze and lost a bundle, recouping since, learning a tremendous amount from our mistakes.

Currently, we have a sizeable nest egg. How did we do it? Our top 10 financial tips, as applicable to the gay investor as to anyone, start with a solid savings habit.

1. Pay yourself first every month, then spend the rest. No oldster lamented that they started saving too young or too much. If you're just starting out, save a small amount regularly; you'll soon see the benefit.

2. Develop a plan. Mutual funds combine stocks of different-sized companies for income or growth, as do bond funds that provide corporate income with U.S. treasury bonds to protect from projected inflation. A "rest-easy" balanced plan might have a proportion of bonds that approximate your age with the remainder split between domestic and foreign stock funds.

3. Watch costs. Seventy percent of Americans invested in 401(k) or 403(b) plans mistakenly think retirement plans are free. There may be costs for trading, brokerage, annual management expenses, marketing costs, front-end "loads" (an entry fee for giving the broker access to your money), early exit penalties (infamously known as surrender fees), and whatever else Wall Street sharpies can stick into a contract. "No load" or index mutual funds with five-letter ticker symbols show their costs when entered in financial search engines. When we retired, we moved our money from our employer's sponsored plan into rollover IRAs to reduce costs.

4. Read up on investing. There are many good books out there showing how financial markets are organized, which will help you with asset allocation. Thousands of publicly traded U.S. companies are categorized as large, medium, or small. International companies are divided into two classes: emerging and developed markets. These five categories together are the traditional core asset classes. Historical data show that small company stocks outperform large company stocks over time, and that stocks outperform bonds. Bonds, however, are crucial for taming the volatility in your portfolio. The indexing strategy eliminates expensive managers and the subsequent need to be a stock-picking expert.

5. Diversify by investing in these five core asset classes. A beginner's portfolio could contain just two funds: a global index fund and a total bond market index fund, at 50 percent each. You then own the stock of 13,000 companies around the world, including in the United States and much of the domestic bond market. Broad diversification is neither complicated nor expensive. How cool is that?

6. An LGBT-friendly, fee-only fiduciary advisor is paid to help you set up a balanced plan that you understand, verify fees, and assist you with other unfinished business, such as referral to another fee-only professional to prepare a trust or living will, a durable power of attorney, health directives, or insurance coverage and domestic/same-sex couple federal tax issues. (See the IRS Q-and-A. See a tax professional for specific tax questions pertaining to your state.) Wall Street brokerages want this business from you with their annual fees, even after your plan is established. Salespeople who offer "suitable" investments may put your interests last and themselves and their firms first. (Read former Goldman Sachs adviser Greg Smith's resignation in his New York Times op-ed.) A genuine fiduciary must put your interests first. These two professional organizations will help you locate the nearest fee-only fiduciary advisor: NAPFA (enter your zip code, then chose "Planning Issues for Unmarried and Same Sex Couples") and Garrett.

7. Funding: Our best three ideas to fund the plan are to control housing costs, transportation and investments. According to national data, half of our monthly income goes for transportation and housing. Reducing these two big-ticket items along with salary contributions can fund your retirement investments. We consistently dedicated half our raises to our retirement plans using some of the rest for vacations. Cutting investment expenses provides a significant increase in the final nest egg result.

8. Rebalancing is easy: As we get older, the risk of getting wiped out is mitigated by increasing our bond allocation and decreasing the stock allocation.

9. Leave it alone: A good plan minimizes tinkering. Tough times will pass. They always have so far, although nobody knows the future. A good plan with the support of a fee-only fiduciary adviser reduces panicky behavior when the market tanks from time to time. For heaven's sake, ignore the petty prognostications offered by the financial media 24/7. It's noise designed to generate ratings and, most importantly, get you to trade!

10. Celebrate your actions toward retirement and financial independence. We can be role models for those struggling heterosexual couples.

The gay community has important advantages: We are naturally motivated to do things ourselves (because we've had to), and same-sex couples' annual household income is higher than that of opposite-sex couples, according to the Williams Institute. This figure is expected to increase.

We don't blame Wall Street for wanting our business; it's flattering. But it's an expensive approach to retirement savings, taxes and estate planning. How expensive? Check out the PBS Frontline documentary The Retirement Gamble to discover that 2 percent a year is too much. So why not take financial matters into our own hands?

Tax and estate planning can be addressed by local LGBT-friendly professionals who charge by the hour with genuine fiduciary standards. We even found a fine attorney 25 years ago to handle our estate planning long before Wall Street came knocking. By following the costs and discovering investing and retirement saving basics, you can learn to manage your retirement plan so that you keep more of your money in your nest egg.

Content concerning financial matters, trading or investments is for informational purposes only and should not be relied upon in making financial, trading or investment decisions.