Advisor to Advisor: What are your clients not telling you?
April 25, 2019
We recognize the important role professional advisors play in their clients’ financial lives, and our goal is to provide resources to support you and to help you build those client relationships. While many professional advisors find that having the charitable conversation with their clients deepens the relationship, surveys of advisors and clients demonstrate that the two parties are not always on the same page.
32%. That’s the number of high net worth (HNW) individuals who expected to change their charitable giving for the 2018 tax season. That number was in sharp contrast to the 65% of advisors who expected their clients’ charitable giving to change in light of new tax regulations.
This discrepancy raises the question: What are your clients not telling you about their philanthropy?
In 2018, U.S. Trust, in partnership with The Philanthropic Initiative, Inc. (TPI), conducted a research study1 to compare advisor perceptions with their clients’ attitudes and behaviors about charitable giving. The results were eye-opening. For example:
46% of professional advisors rated “reducing taxes” as an important reason behind clients’ decision to give to charity, compared to only 16% of HNW individuals.
Almost 30% of advisors viewed “creating a family legacy” as an important motivation for their clients’ philanthropy versus only 12% of HNW individuals.
Wealth preservation was viewed by advisors as a very important reason for clients’ hesitation to give, while clients attached significantly less importance to this factor.
Most advisors find that discussing philanthropic priorities with HNW individuals helps establish new relationships and deepen connections with existing clients and their families. Additionally, HNW clients are increasingly looking for comprehensive wealth advice that includes their charitable goals, so being well-versed in the charitable conversation is a powerful way to set yourself apart. Interestingly, structured giving tools such as donor-advised funds are becoming increasingly important to HNW individuals as means for achieving their charitable goals. 22% of those individuals surveyed in 2018 selected donor-advised funds as a tool for their charitable giving, compared to just 13% only five years earlier.
Some quick tips:
1. If you haven’t had the philanthropic conversation with your clients in a while, express interest in including the topic in your next review of their financial plan.
2. Once the conversation is on the table, don’t make assumptions. Ask your clients to drive the agenda.
3. Need help getting them started? Consider asking your clients to articulate what they hope to accomplish with their wealth. Do they want to involve their children in their charitable giving so that their legacy extends beyond their lifetime?
As your conversation develops, you’ll better understand how important tax considerations are and how those issues can be addressed in the choice of giving vehicles. Implementing a client-driven agenda can help you attract and retain HNW clients, more than 70% of whom have indicated that discussing charitable giving with their advisor is important to them. We look forward to working in partnership with you as you continue to serve all of your clients’ financial needs.
Our mission is to increase philanthropy and maximize its impact over time. We want to support you as you help your clients reach their philanthropic goals.
1U. S. Trust, The Philanthropic Conversation: Understanding Advisor Approaches & Client Expectations, July 2018.