How Clients Benefit From Discussing Charitable Planning With Their Advisors

By Ken Nopar, Senior Philanthropic Advisor

Since the 2017 Tax and Jobs Act passed, more advisors and clients have discussed charitable planning than they had previously. The recent column, “How Advisors Benefit from Having Charitable Conversation with Clients,” covers why this discussion has been taking place so often.

Though in the past, some advisors feared that talking about charitable giving may decrease the assets they manage for a client, today most advisors now understand how the conversation deepens relationships and brings in additional AUM.

As a result of these discussions over the past few years, many clients are now more effectively donating either directly to their favorite non-profits or creating or additionally funding their donor advised fund accounts or other charitable vehicles.

Other advisors, however, have not yet engaged their clients in these conversations, perhaps because they may not realize how much their clients need their help or they fear that their clients may not be receptive to the discussion. The advisors need not worry since nearly all HNW clients give to charity and will appreciate their input if this can help them give more efficiently and with greater impact.

Some of the situations or challenges clients face and how advisors can help them include:

1. They may not realize that other assets besides checks or credit card payments can and often should be the source for their charitable donations.
2. They may be missing significant tax benefits through annual and estate giving.
3. They can give even more to charity, give more to their family or keep more themselves.
4. They want to maintain their level of giving annually to their favorite charities but find that to be difficult when their income varies from year to year.
5. They are approaching retirement within the next 5 to 15 years and want to continue to donate then, but fear they may not have enough income at that time or the tax advantages of giving when their income is less may not be as beneficial.
6. They may be receiving poor advice from friends, family, non-profit staff or other advisors and may set up an inappropriate charitable vehicle, establish the right vehicle at the wrong place or in something that may be outside of the control of their trusted advisor.
7. They are advancing in age but keep putting off decisions about charitable giving during lifetime or at or after death, even though these decisions should be made now while they still think clearly.
8. They regret that they have not discussed philanthropy with their children, included them in decisions or passed down their charitable values, or put together a plan to use philanthropy as a means to keep their family united after their deaths.
9. They may be frustrated by having to keep track of numerous tax receipt letters from charities, receiving many solicitations from non-profits, or deciding how, when, how much and which assets to donate.
10. They may be overwhelmed or burdened by the responsibility of running their own private foundation, unhappy about the cost, and may be looking for a simpler or less expensive alternative.
11. They are reactive in their giving and often procrastinate until the end of the year when they make hasty giving decisions.
12. They are generous with their giving, but don’t feel that they are having an impact.

It is rare that clients will face all 12 of these issues, but advisors who guide them to overcome some of these will be welcomed and embraced. Often clients are not aware that they can turn to their advisors for help with these matters and feel they should just try to figure out a path themselves.               

The advisors who address the above issues will often become the lead and trusted advisor, especially because the clients’ charitable investments and goals are among the most important aspects of their lives and legacies. By demonstrating how donating different assets can reduce taxes and enable them to provide additional support now and for many years, clients will view their advisors as an important part of their charitable planning.

Additionally, many advisors have in recent years helped clients establish donor advised funds so they can receive one tax-receipt letter each year, give a consistent amount every year, reduce the cost and eliminate the complexity, responsibility and burden of managing their private foundation, utilize the donor advised fund sponsor’s technology to easily make and keep track of all of the grants they make over time, and unify the family.

As a result of these conversations, clients will feel a deeper sense of satisfaction, accomplishment, and confidence with their giving and know that their favorite charities will benefit as well.

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.