The difference between existing and thriving in the wealth management industry? Offer more than money management. Nowadays, things like cash flow planning and security selection aren’t scoring you any points with clients—especially not with the next generation of clients, and especially not during vulnerable times like these.
Today, it’s about understanding the intent of the client’s wealth just as much as it is about growing it. It’s about having a high “emotional IQ” to better understand the client’s motivations and values. It’s about showing empathy and delivering peace of mind during meaningful life events. Advisors taking this more personal approach to their client relationships can offer truly holistic financial plans and see increased client loyalty as a result.
As clients look for guidance in these uncertain times, advisors are in a unique position to rise to the occasion and deliver tremendous value. But how do you begin? One proven way is through charitable planning and consultation. Below are five topics that advisors can broach to deepen existing client relationships and attract new ones.
1. Giving While Living; Giving While Growing
Do not wait to have the charitable conversation with clients. There is no perfect persona, no age, portfolio minimum or life event that marks a client “ready.” In fact, advisors waiting for a significant wealth creation event (like the selling of a business) are likely missing opportune everyday moments to provide their clients with smart advice. The best approach is to regularly have charitable conversations while clients are building their wealth.
This strategy is reinforced when we look at the trend of “giving while living.” More and more people are intentionally giving their proverbial “time, treasure and talent”—that is their hard-earned wealth and skills—during their lifetimes. It allows them to make a difference sooner rather than later and to witness the impact of their generosity firsthand.
Just look at philanthropists’ swift and generous response to COVID-19 relief. In a recent Fidelity Charitable study, a quarter of donors said they plan to increase their donations in response to COVID-19, while 54% plan to maintain their giving levels.
This shift from the traditional approach, of leaving a legacy after passing, takes the onus off estate planners who typically manage bequests and places it squarely on wealth managers to strategically integrate giving into financial and life planning.
2. Involving Younger Family Members
For those who choose giving while living, philanthropy is an integral part of their lives and involving family members is key. Thankfully, the next generation is ready and eager to join the conversation! Over just five years, the percentage of new Fidelity Charitable Giving Accounts opened by millennials more than doubled, from 6% in 2014 to 13% last year.
The millennial generation, often referred to as the “impact generation,” is diverse, tech-savvy and optimistic about the potential of philanthropy to bring about positive change in the world. Successful advisors are those who support this changing generational attitude toward wealth and position themselves as a facilitator of social good. To do this, advisors must ask a lot of questions and proactively approach clients’ issues of interest. This is how the best advisors are growing with their clients, to avoid clients outgrowing them.
3. Investing With A Social Conscience
It’s no surprise that another trend fueled by young investors is impact investing. Whether you know it as “impact,” “sustainable,” “socially responsible” or “ESG” investing, there are trillions of dollars estimated to be at play with this strategy in America.