GAY, LESBIAN INVESTORS A MUCH-IGNORED MARKET: THEY CONTROL $800 BILLION, PRESENT UNIQUE PROBLEMS.

When the financial services unit of General Motors Corp. set out to drum up business in one of the newest “emerging markets,” it didn’t roll out an ad campaign in a Third World country.

Instead, General Motors Acceptance Corp. began marketing mortgages through the Gay Financial Network, a fledgling World Wide Web site that aims to provide gays and lesbians with one-stop shopping for financial services.

Conseco Inc. and Fleet Financial Group’s U.S. Clearing have similar alliances with the website, along with hundreds of advisers, lawyers and accountants participating in its fast-growing referral network.

“From just a pure business perspective, it makes sense” to target the gay and lesbian market, says James Farmer, a spokesman for Detroit-based GMAC.

It’s easy to see why.

Gays and lesbians make up at least 5% of the U.S. population, an estimated 13.5 million people, according to the network.

They control more than $800 billion in assets. About 3.2 million own stock, and approximately 3.7 million have home mortgages.

Gay and lesbian Internet users have an average household income of $62,000 annually, according to a July survey by Greenfield Online, a Westport, Conn., marketing research company. That compares to about $53,000 for the average household using the Web.

Yet until recently, gays and lesbians had been largely ignored by big financial services firms. At the same time, many gays and lesbians have been reluctant to reveal their sexual orientation to planners and brokers. As a result, many get faulty advice when it comes to taxes and estate planning.

That’s because gay couples don’t get many of the legal protections and tax breaks available to married heterosexual couples. For instance, gays who inherit assets from deceased partners may face a huge tax bill. And wills are often challenged by family members.

“One of the biggest things I’ve seen is the number of gay and lesbian people who are not ‘out’ with their financial professionals,” says Pamela S. Marshall, financial consultant for Merrill Lynch & Co. Inc. in Valencia, Calif. “They are preventing themselves from getting the best advice. It’s like going to a doctor and forgetting to mention that you’ve been coughing for the last three months.”

The one large financial services company that was early to recognize the needs of the market now has a small army of advisers specializing in planning for gays and lesbians. Since 1997, American Express has assembled 500 (out of 10,000 overall) advisers dedicated to the market, although the company declines to say exactly how much business they’ve brought in.

“American Express has been reasonably successful,” says Walter B. Shubert Jr., founder of the Gay Financial Network. “It took a level of courage for them to be one of the early starters.”

Planners specializing in the market say it can be lucrative for those who are truly open to doing business with gays and lesbians and savvy about their financial needs. But many clients have gotten plain-vanilla advice from other advisers — or the cold shoulder.

“They want to make sure they are dealing with someone who not only understands their lifestyle but doesn’t have a problem with it,” says Kay L. Maxwell, a Dallas-based adviser who specializes in the market.

In fact, some gay and lesbian advisers say they have an edge because potential clients feel more comfortable approaching them.

“I’ve had clients who have gotten the homophobic response . . . I have clients who got bad or insufficient advice simply because they were dealing with people who really don’t understand the issues,” says Merrill Lynch’s Ms. Marshall, who is a lesbian.

For instance, Ms. Marshall says she has been able to save one gay couple hundreds of dollars in taxes each year by urging them to take advantage of a portion of the tax code that allows individuals to claim a “non-relative adult” who meets certain criteria as a dependent.

“A lot of people choose gay vendors because they are comfortable. There is also a desire to support the community,” says Jennifer Hatch, managing partner of New York-based Christopher Street Financial Inc., a gay-owned and operated brokerage and financial planning firm with $250 million under management.

Since Ms. Hatch and a partner bought the firm in 1997, its staff has tripled to 20 (including 12 brokers), and it has opened a branch in Charlotte, N.C. The firm, which is actually located on Wall Street and not on the Greenwich Village street for which it is named, expects to open additional branches in Short Hills, N.J., and Los Angeles in the next six months and four more offices in the next two years.

Specialists say financial planning for gays and lesbians poses unusual challenges.

One of the biggest problems is the potential tax consequences of joining assets, such as investment accounts, says Ms. Hatch. If one member of a couple contributes at least $10,000 more than the other in any given year, that person may be slapped with a gift tax.

“The Internal Revenue Service treats married couples as a single economic unit so they can move money between them without a problem,” Ms. Hatch explains. Gay and lesbian couples “need to be informed of the tax consequences of their actions. It is not this easy romantic thing like it is for married couples.”

She also stresses the importance of drafting a will that is supported by “redundant documents” like a domestic partnership agreement that details “who contributed what” and provides for dividing assets if one partner dies or the couple splits. That’s because wills are often challenged by the deceased’s family.

“A really important thing is creating a will because all of your joint assets could end up going to your spouse’s family and you will have nothing,” she says.

Indeed, Mr. Shubert of the Gay Financial Network predicts that advisers and financial services companies who go after the market without understanding its complexities will eventually flop.

“Within the gay community for some time, many service providers deluded themselves and received a moderate amount of success simply by branding themselves as gay” or gay-friendly, he says.

“It is simply not enough to brand yourself as gay-friendly, you have got to be good,” he adds.