How Advisors Benefit From Having Charitable Conversation With ClientsSubmitted by American Endowment Foundation on April 22nd, 2019
By Ken Nopar, Senior Philanthropic Advisor
More than ever before, advisors and their clients have been talking about charitable planning. The 2017 Tax and Jobs Act, the concept of bunching donations, the popularity of donor advised funds (DAFs), the generosity of clients and growth of their investments, the continued needs of non-profit organizations, and the understanding that advisors can help clients have more of an impact are just some of the reasons why these conversations are increasingly taking place.
Advisors are realizing that these discussions are good for them, their clients and the charities they support.
However, some advisors are still hesitant about initiating the conversation, even though they know that their clients are charitable. After reading the list below, hopefully they too will understand why many other advisors are engaging current clients and prospects in the discussion and will soon do so themselves. Some of the benefits include:
- Demonstrates to clients that the advisor is interested in them and is not just interested in managing assets.
- Enhances and deepens relationship with clients.
- Increases exposure to spouse and children who will be more likely to remain as clients after death of wealth creator.
- Differentiates advisor from others and can be the difference maker when client is deciding between firms.
- Helps bring in additional AUM from clients and referrals.
- Enables advisor to encourage donations of noncash assets, including more complex assets or those that may not be under control of the advisor.
- Allows for ongoing and positive conversations about a topic of importance to clients rather than market volatility and uncertainty, death and taxes.
- Reduces year-end stress upon advisors and associates by encouraging clients to make donations throughout the year rather than just in December.
- Minimizes work of advisor’s staff by recommending that clients donate stock to one donor advised fund sponsor rather than many charities, or donating assets to avoid having to research cost basis.
- Develops relationships with clients’ accountants and attorneys and increases likelihood that advisor will be included in any discussion with mutual clients about charitable planning.
- Eliminates the likelihood that clients will set up a DAF account on their own or make charitable decisions that will prevent advisor from managing significant assets.
- Creates the opportunity to help clients achieve an impact greater than they could have done on their own or in consultation with their brother-in-law.
Many clients don’t know where to turn for help, or even that they could use help in supporting causes and charities that are very important to them. The benefits to them to include their advisor are just as significant, as they can learn to donate more tax-efficient assets, reduce their taxes, give more to charity or keep more themselves, reduce their frustration and record-keeping, involve their children, and help people and organizations to more of an extent than they thought possible.
Advisors increasingly realize that nearly all of their HNW clients are already donating to charity, and that if they do not discuss charitable planning with clients, another advisor will. These deeper conversations help many advisors retain clients even when investment returns are subpar. And perhaps most importantly, understanding clients’ charitable plans and how these fit into their overall goals will enable advisors to provide clients with the most appropriate financial plan.
At American Endowment Foundation, we look forward to helping you and your clients build a tax-smart charitable plan. Contact us or call at 1-888-966-8170.
This article originally appeared in Financial Advisor.