Financial advisors can go to great depth on investment strategies with complex maturation schedules, risk profiles and tax minimization. But charitable giving, it seems so ... soft, doesn't it?
Charitable giving is a topic that will come up more often since over the next 40 years there will be an estimated $41 trillion in wealth transferred from one generation to the next as baby boomers retire in numbers. If historical trends hold true, around 6% to 8% of that wealth will go toward charitable causes.
Surveys by PNC Wealth Management and Bank of America conducted last year indicate that high net worth (HNW) individuals view philanthropic decision-making as inextricably linked to their broader financial planning initiatives. When one considers this fact, it's no surprise that clients are turning to their legal and financial advisors to assist them in developing plans for charitable giving.
However, philanthropy is often the most underexamined portion of a wealth-holder's financial portfolio. According to a 2010 Fidelity Charitable Gift Fund survey of private client advisors, only 52 percent provide philanthropy-related advice.
Clearly, this is a missed business opportunity.
In order to help advisors work more effectively with clients around the development and implementation of charitable intent, the following "top ten" list outlines items to consider in the philanthropic planning process. Having this information at your fingertips means you will be better able to:
Engage clients in discussions about charitable intent, options and opportunities
Ensure that clients have the resources necessary to support philanthropic activities and interests
Educate clients about the responsibilities that come with meaningful philanthropy
One: Key Questions For Initiating The Conversation
Incorporate key questions into client intake surveys and annual reviews to help integrate the charitable planning conversation in a way that respects clients' privacy, values, and autonomy. Guiding questions such as "what percentage of your assets do you plan to devote to philanthropy?" and "what does successful philanthropy look like to you?" help advisors to better understand clients' philanthropic goals, who they want involved in the charitable planning and decision-making processes, and how they envision implementing their charitable activities.
Two: Charitable Planning Checklist
Charitable planning is a multifaceted process involving several key players (see item three, "The Client-Centered Team"). A comprehensive "to do" list will ensure that advisors cover all of the most important, and some of the most frequently overlooked, aspects of the charitable planning process and will tell them which professionals should be included at each stage.
Items on such a checklist might include:
Assess donor intent
Determine time horizon for charitable giving vehicles
Periodically review the estate plan to ensure that named charities, giving strategy and named trustees are still in alignment with clients' intent