How Charitable Giving Can Help You Keep your ClientsSubmitted by American Endowment Foundation on March 13th, 2017
By Eric Kinaitis
An article in InvestmentNews reported that nearly 20% of millionaire clients are considering getting rid of their current financial advisor. The survey indicated that almost half of millionaire clients do not think highly enough of their current advisor to recommend them to friends or other family.
An expert quoted in the article stated, “I think advisors should not feel overconfident just because their clients aren’t telling them they are dissatisfied. Assuming everything is OK makes an advisor vulnerable.”
One of the suggestions reached in the article was efforts to build a deeper connection between the advisor and client. One means to build a stronger connection: charitable giving. Financial Planning referenced a study of affluent persons by US Trust that showcased charitable giving as the 3rd most important purpose of wealth. Only financial security for their family and financial independence ranked higher.
A VP at a financial company commented, “A lot of clients are looking for help from advisors, but there’s a major disconnect between client needs and advisor knowledge …” when it comes to the concept of charitable planning and best practices.
As an advisor, what are the first steps toward becoming wiser at charitable planning? The starting point is knowing what questions to ask of your clientele to determine their interest level in charitable giving. Questions such as:
- “Are you currently involved with any non-profit organizations? How . . . as a donor, volunteer, board member?”
- “Do you typically support the same charities every year or do you vary your support from year to year?”
- “How do you decide which charities you support?”
- “Who else helps you decide which charities to support?”
- “Do you give the same amount each year? Upon what does it depend?”
- “Which donations have you made that have provided the greatest satisfaction or regret?”
- “Would you prefer to give anonymously or receive recognition?”
- “What types of assets have you used when you have donated in the past? Cash, checks, appreciated stock, other non-cash assets?”
- “Do you have any charitable vehicles in place, such as a private foundation or donor advised fund?”
- “Do you want to donate during your lifetime, at death, or for many years after your death?”
Once that knowledge is gained and their need determined, understanding how a charitable tool such as a donor advised fund (DAF) can be of help is the next step. From powerful tax savings to the types of assets that can be used, a DAF can be an ideal solution for building a deeper bond between the advisor and their charitably-minded client.
A CEO of a wealth management firm quoted in the Financial Planning article said,” As financial advisors, we should be focused on how to give our clients holistic advice that covers all their financial objectives, including philanthropy.” Being able to understand a clients’ charitable passions and help them manage their giving elevates an advisor past the dry expertise of investment advice and quarterly returns. Such efforts and understanding “deepens relationships with clients and opens up new opportunities.”
At American Endowment Foundation, we look forward to discussing how charitable planning and DAFs can help a financial advisor avoid being one of the unfortunate percentage of advisors whose millionaire clients have decided to leave them. Contact us or call at 1-888-660-4508 to learn more.