How to Discuss Philanthropy with Financial Advisory Clients

How to Discuss Philanthropy with Financial Advisory Clients May 17, 2017Leave a comment

As a financial advisor, you’re a guardian and guide for your client’s financial well-being. But when it comes to philanthropic giving, many advisors cede that role and avoid engaging their clients on the subject. Don’t make that mistake. If you have a client inclined to philanthropy, you have a responsibility to guide them in that process.

The waters of philanthropic giving are murkier than they may appear, and not every organization calling itself charitable truly is. Clients can make a smarter, more fulfilling choice if they work with a savvy advisor.

Taking all this into account, it’s clear that advisors should be involved in this aspect of their clients’ financial lives. But how do you approach that sometimes awkward and difficult conversation?

Why Advisors Should Care about Philanthropy

If advisors are responsible for guiding their clients’ finances, then steering them toward legitimate charitable organizations is part of the job.

Almost 100% of high net-worth-families donate to charity and 75% volunteer their time, according to a study by U.S. Trust. Advisors can help clients find a charity that will use their funds thoughtfully.

Many organizations spend more on marketing than programs and services, and it’s part of an advisor’s job to show clients how to make an informed decision.

By mentioning charity in client discussions, advisors can build a more trusting and holistic relationship. Philanthropy is about more than just money, and involving yourself in this part of your client’s life will lead to a deeper understanding of their needs and goals.

The more you participate in your clients’ charitable giving, the more informed you’ll become of the world of philanthropy. You’ll know which organizations to avoid, which to support and how to make the process as smooth as possible.

How to Approach the Topic

Some advisors get the ball rolling by asking about any past donations, organizations they support or current gifts. Certified financial planner (CFP) Brent D. Dickerson of Trinity Wealth Management said he usually brings up charitable giving when discussing estate planning. Although some clients avoid talking about their mortality, Dickerson said others want to leave a legacy behind.

According to research done by Dr. Russell James of Texas Tech University, people are more receptive to the idea of charitable giving when remembering past times they helped someone else.

Starting from that place could be a productive way to engage clients. While he cares about philanthropy, Dickerson doesn’t discuss it with every client. “I mostly stay away from the subject if I can gather that a client is not charitable nor geared towards being philanthropic,” he said.

This is where some of the awkwardness of the philanthropy discussion comes from. Advisors don’t want to make their clients uncomfortable, and bringing up the topic of charitable giving can come across as an unwanted suggestion to the less charitably inclined. Tread carefully, and get to know your clients before breaching the topic.

Advisors should also let their clients know about the financial benefits of philanthropy, which can be quite substantial. Dickerson said there are multiple ways clients can donate to charity while lowering their tax burden. “Taxes seems to be the number one reason most people choose to leave a charitable estate,” he said. “With this, there are ways of donating appreciated stock, establishing trusts like charitable remainder or charitable lead trusts.”

The Bottom Line

Giving makes people happier, and they are starting to embrace this notion more than ever. With the ubiquity of information on the internet, people are also starting to become more aware and interested in the tax benefits of charitable giving. Embrace your clients’ generous inclinations and make it clear you want to help them achieve their philanthropic goals.

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