Hortz: How do you see that families utilize TIFIN Give to collaborate across multiple generations to impact the social causes they care about the most?
Hoekstra: A key feature of our platform is the ability to create a Family Tree and allocate charitable assets for each member to donate to the organizations of their choice. This empowers family members to make an impact on the causes that mean the most to them, while also seeing their overlap with others’ priorities.
They can also champion causes by inviting family members to donate to a specific organization in order to achieve a target goal. Have you ever run a race for charity and asked your friends or family to pledge a donation amount to help you reach a larger fundraising goal? It is the same idea, but it can now all be done in-platform—members can respond to the invitation to join the campaign, research the organization and make a donation in the amount of their choosing, all with the click of a button.
Hortz: How did you design your charitable technology platform to also help advisors integrate philanthropy into financial planning and to grow their practices? How does TIFIN Give help philanthropy become a core pillar of financial planning and investment strategy?
Hoekstra: Up until now, most clients manage their charitable giving through a commercial provider of DAFs or private foundations, such as Fidelity or Schwab. Few firms offered philanthropic planning due to the high costs of competing with these commercial giants. Charitable giving would immediately leave the financial planning experience, despite how integral a role philanthropy plays in money management.
Besides a spouse, financial advisors are the most valuable source for information on philanthropy. Charitable giving is increasingly important to the financial planning experience—advisors who offer charitable planning see three times the organic growth of their practice and 1.3x new assets per investor. In other words, a close relationship between charitable giving and financial planning is beneficial both for clients and their advisors.
Charitable and financial goals are not mutually exclusive; they are fundamentally intertwined. Two challenges most commonly faced by affluent donors are identifying where to donate and understanding how much they can afford to give. There is a natural opportunity for trusted advisors—who already understand clients’ financial needs, values and priorities—to step into the role of philanthropic advisor to navigate these challenges.
Our platform was designed for both advisor and client experiences so that each party can be as hands-on as desired. Through the platform, advisors can guide client conversations to unpack their most closely held values and help establish individual or family mission statements to guide giving priorities. Advisors are able to invest client DAF assets in values-aligned pools to create a more intentional vision of financial wellness.
By adopting digital charitable giving solutions, advisors can strengthen client ties by bringing the very personal act of giving into every financial experience.
Hortz: Why do you feel that we are seeing an increasing interest from advisors in offering charitable planning services?
Hoekstra: Millennial earning power is expected to increase by nearly 75% over the next few years as over $80 trillion changes hands over the coming decades. Millennial financial and philanthropic interests differ from those of older generations, and advisors are realizing that they must address these differences to stay relevant and foster enduring client relationships with upcoming generations.
Another realization is that philanthropic planning has a direct impact on the retention of clients in the advising business. Fidelity Charitable found that firms that offer philanthropic planning have an 81% share of wallet for their clients, compared to a 76% share for those that did not. Further, advisors who incorporate philanthropic planning have three times the median organic growth. They also have a higher share of clients with at least one million USD in managed assets.
Firms can earn fees advising on DAF assets as they do with other accounts. Plus, charitable giving is so personal that it fosters a new level of intentionality with that client, strengthening the relationship and retention
With DAF assets currently exceeding $160 billion, the question is not if advisors should offer them—it’s how soon they can start.
Hortz: Any suggestions or recommendations for advisors on rethinking charitable giving as a core part of their services due to the innovative technology available?
Hoekstra: Technology is transformative. It brings more personalized, impactful, efficient and affordable experiences for clients and advisors alike. Plus, it removes most barriers to entry—you would be hard-pressed to find reasons not to make charitable giving a core part of advising services.
The trends in giving and statistics on philanthropic planning’s impact on advising are abundantly clear: now is the time to rethink how you support clients’ desire to make an impact on the causes that mean most to them. Digital charitable giving creates an opportunity to foster stronger relationships with clients and heirs.
The Institute for Innovation Development is an educational and business development catalyst for growth-oriented financial advisors and financial services firms determined to lead their businesses in an operating environment of accelerating business and cultural change. We position our members with the necessary ongoing innovation resources and best practices to drive and facilitate their next-generation growth, differentiation and unique community engagement strategies. The institute was launched with the support and foresight of our founding sponsors—Ultimus Fund Solutions, NASDAQ, FLX Networks, Pershing, Fidelity, Voya Financial and Charter Financial Publishing (publisher of Financial Advisor and Private Wealth magazines).