How A Simple Worksheet Has Grown the AUM of Top AdvisorsSubmitted by American Endowment Foundation on July 27th, 2020
By Susan Kay, VP-Business Development, MFS Advisors, Guest Columnist
Over the years, I have had the privilege of learning from some of the most successful advisors in the country. A common thread that I discovered across many of them is the value that they place in getting involved in their client’s charitable giving. Yes, I realize that may strike many other advisors as a contradiction; after all, isn’t it a financial advisors’ job to retain and grow their clients’ assets, not engage in giving those assets away?
Yet I discovered there are three universal truths that exist among some of the most successful advisors:
- Assets placed in a donor advised fund (also known as a DAF) provide a stable, longer-lived source of AUM within the practices of these successful advisors than average. These DAFs also serve as a source of phenomenal generational reach, allowing these advisors to make inroads to the family (and future heirs) of their current clients.
- The more high net worth families that these advisors are able to meet, the greater that opportunity for gathering assets that qualify to be put into a donor advised fund.
- The more philanthropy-focused these advisors are, the easier it can be to attract the attention of many high net worth individuals who share a similar priority.
Cone Communications did a study in 2015 on how corporate responsibility is viewed by consumers. What their research indicated was that when a person or company is charitably involved, two things happen:
- 96% of people have a more positive image of that person/company;
- 91% of people are likely to switch brands to one that supports a good cause if other factors such as price, quality, value, etc. are equal.
So what does that mean to you as an advisor? It means if you can successfully position yourself and your practice as philanthropically-minded and engaged in the community, you stand to move assets from competing financial advisors in the marketplace to your own book.
In this article, I am going to help you build out and capitalize your philanthropic angle with innovative ideas that I have learned from those advisors who have met with success with their charitable planning efforts and helped them get in front of HNW audiences.
Philanthropic Giving Sheet
At a Barron’s conference I attended several years ago, I had the good fortune to attend a workshop hosted by the National Institute on Philanthropic Planning. The speaker shared the following statistic: “82% of your clients would like to have a conversation with you about philanthropic planning, and yet only 17% are ever asked.”
Many of the successful advisors that I have met have a philanthropic planning grid sheet similar to this one (feel free to download this one that we use at MFS; we’ll go through this in more detail later in the article.) For many of their long-term clients, a sheet like this gets the conversation started on understanding how important charitable giving is in their lives.
The advisors I have met use it this way: At the end of a regular quarterly meeting with a client, they slide several copies of this sheet across the desk, and say, "Look, one of the areas we've not spent a lot of time on is talking about what your family's philanthropic giving looks like and what your plan is. I'd like you to take these sheets home, I'd like you to scribble all over them, write down what you're currently doing … maybe add what you think you'll want to do. And then I want you to bring them in to your next meeting and a part of our meeting is going to be talking about your family’s giving plan.”
You as their advisor have now provided initial guidance in getting your client to think about their giving.
When they return to your office with this completed form, you will be able to have a conversation that centered on the client's feedback which should allow for a constructive start to the family legacy plan.
Let’s go through the form . On the left-hand side, you have nine major categories that people donate toward either during the year, their lifetimes or at the end of their lives.
In the next two columns, you have Local and Global. A research project by the National Institute on Philanthropic Planning showed that people actually want to make more charitable donations locally. They want to give back in their communities, they just don't know how to affect this. Large global causes are simply better known (and therefore easier to donate to) but the leaning of most donors is local.
The next column is the Organizations they donate to and the Amount or Percentage of wealth that they give toward those organizations. The last column is Legacy Wishes. This allows your client to indicate the causes or organizations that are most important to them; causes so important that they essentially want to be remembered by their children and friends by what they did to help that cause.
When your client returns to your office for the next meeting with their completed form(s), you have the opportunity to open up a conversation with them that is deeply meaningful in two ways. You gain insight into what is important to them and what they hope to instill into their next generation. Your role as their advisor in this context is to be a coach in how they manage their giving.
Do they give to multiple charities that support the same specific cause? Is there a specific charity that they give to every year? Does one charity receive the majority of their donations? This information allows you go deeper and learn more about your clients with questions such as: Why is this charity/cause important to you? How did you get connected with that?
Your clients will be proud to tell you their personal stories and why they donate to these organizations.
As the advisor, you now know much about your client and about what is important to them … but your job isn’t done yet. At the conclusion of this meeting, the worksheet that your client filled out isn’t just a piece of paper; it is now a “family giving plan” that can be implemented for the future.
The conversation may sound something like this:
“You have done a great job completing this. This is a great plan to continue with in the future … but we’re not done yet. We’ve got one more step. I’d like us to book an appointment sometime in the next 30 days, and I like to bring your kids in. Let’s introduce them to your family giving plan. Let them learn why these causes are important to you. Let’s share these stories with them. Let’s get them connected to your giving plan by virtue of the stories that you tell.”
“And I’d like you to do one more thing. I’d like you to seriously consider allowing each of your kids to choose one charity of their own to put into the family giving plan so that they can get emotionally attached to your plan.”
“That way, when either we, or you and your kids, sit down at the end of each year and have a conversation about who you're donating to that year, they're invested, they're involved, and you're illustrating for them what your family's legacy is all about.”
For you as an advisor, this allows several things to happen:
- One, it allows you to create generational reach. In every practice that I've spoken with, they had this opportunity to meet the next generation. Not knowing the adult children of your current clients is one of the greatest risks to your business model.
- This also makes your client book younger because you will have the ability to gather the assets of these adult children who are still working and still putting money away. It makes your book more valuable. It adds the assets of adults 45 to 65 years who are still working.
- And quite simply, this very simple tool stabilizes assets under management, particularly if the conversation extends to the establishment of a DAF, a tool that can help organize and perpetuate a family giving plan.
By utilizing an idea like the philanthropic giving sheet, you too can build your business to levels you might have never imagined before. Good luck!
At American Endowment Foundation, we look forward to discussing how DAFs can play a role in building your AUM. Contact us or call at 1-888-660-4508 to learn more.