As $30 trillion changes hands in the next couple of decades, it has never been more important for advisors to understand charitable giving, says Karla Valas, managing director of the complex assets management group for Fidelity Charitable.

Interest in philanthropy is going to increase as older Americans start thinking about their legacy. Philanthropic planning can be a means for advisors to cement relationships with clients, succeeding generations and even with advisors' employees, Valas says.

“Charitable giving is an area that is significantly overlooked in financial planning today,” she adds. “It is estimated 27 percent of the money that is in motion will be given to charity, but only 10 percent of advisors provide strategic charitable giving plans for their clients.”

“We know the charitable giving conversation is one that is not taking place for many advisors,” Valas adds.

A recent report by Foundation Source, a resource for creating private foundations, showed “advisors may have misplaced confidence in their knowledge of private foundations and donor-advised funds, which could affect the quality of their counsel around charitable vehicles.”

“Advisors consider themselves relatively well informed about their knowledge of both charitable vehicles, but when asked to assess whether specific statements regarding these two charitable vehicles were true or false, a significant percentage of respondents gave incorrect answers,” said Foundation Source.

For example, nearly half were under the impression that a donor-advised fund can be converted into a private foundation, which is a misconception that might lead to unforeseen consequences, the report said.

Talking with clients about giving away their money can be an awkward conversation, but advisors have numerous resources at their fingertips, she says, Fidelity is one of the few firms that has a charitable practice management program to teach advisors how to approach clients and how to use vehicles that are available for legacy planning.

Advisors can mine the client’s IRS 1040 form to see if he or she gives money and to whom. In that way the advisor will know how to start the conversation.

Research online can also reveal if the client serves on any nonprofit boards or if he or she is involved in local charities. In addition, advisors can use their own experiences with local charities to make connections with philanthropic-minded individuals.

Working with clients on their philanthropic goals can deepen the relationship with the client and the next generation of the family, according to Fidelity.

At the same time, having the knowledge to work with clients on giving strategies can be very satisfying for advisors, which can help attract talented advisors to the firm.

“If you are not giving your client advice on charitable planning, another advisor will. Your clients’ friends may be working with advisors who do provide this service. It can differentiate you from other advisors in this very competitive time in the industry,” Valas adds.