Financial advisors should direct clients to think about “the what, who and how” of charitable giving, says Ann Gill, chief philanthropic officer of Vanguard Charitable.
Initiating that conversation can make an advisor a more trusted and valuable resource for an investor, she says.
“Less than half of the high-net-worth individuals are happy with the charitable conversations they are having with their financial advisors, according to a recent study conducted by U.S. Trust in partnership with The Philanthropic Initiative,” she adds.
“Either advisors are not asking the right questions about a client’s philanthropy, or they are waiting too long to initiate the conversation.”
Advisors should have the conversation about charitable giving with clients and they should have it early in the relationship. It can start with discussing the what, who and how of giving, she says.
Gill advises starting the conversation by asking what the client is passionate about. That can help determine what charities to give to or causes to support.
Then decide who to involve in the conversation: the advisor, the family, a friend, a business associate or the charity itself. Ultimately this will result in the development of a strategic giving plan.
Finally, find the best vehicle for implementing that plan, which could be a donor advised fund, a private foundation, a charitable remainder trust or something else. “This is where the advisor comes in to help select the best means of carrying out the client’s wishes.”
Donor advised funds, such as Vanguard Charitable, allow an investment to grow tax-free and enable the client to make grants to charities when he or she is ready and when it fits the strategic plan, Gill says.
The process is about communication and prompting the client to think, she adds. The fact that donors are not happy with the talks they are now having with their advisors means “high-net-worth people are hungry for meaningful conversations about how to donate their wealth. They are looking for a better balance to their financial discussions: less technical and tax talk and more dialogue on personal passions and interests.”