Financial advisors who include charitable giving in their practices are more successful than those who do not, according to a Fidelity Charitable study released today.
Planning for charitable giving helps advisors grow their practices, brings in more revenue and makes clients more likely to refer them to others, said the study, “On the Leading Edge: Accelerating Firm Growth with Charitable Planning.”
“It is critical that financial advisors not only be part of the decision-making [for charitable giving], but initiate the conversation with their clients. Charitable planning opens the door for advisors to reinforce the breadth of their wealth management expertise and build stronger client relationships and more holistic financial plans,” Fidelity Charitable said. “In many cases, charitable planning is a key strategy used to deliver on a firm’s objective of providing holistic wealth management.”
The study, which included 1,200 RIAs and family offices, showed that advisors who incorporated charitable planning had six times the median assets than those that do not include it. In addition, they had three times the median organic growth and 1.3 times the median new money.
In addition, the study showed that clients who receive charitable planning are more loyal and more likely to recommend their advisors, compared to those who do not.
Advisors who offered planning for charitable giving had an 81% share of wallet for their clients, compared to a 76% share of wallet for those who did not, the study said. They also had higher share of clients with at least $1 million in managed assets, with 33% of their clients having at least $1 million, compared to 18% of clients for those who did not include charitable planning.
Charitable planning is an appropriate topic to broach with all clients for advisors who want to deepen the client relationship, the study said.
“It’s amazing how a simple and short question can spur so much conversation. Clients love talking about being charitable and feel proud of it,” Sirma Tzoutzova, wealth manager at Fidelity Investments, said in a statement.
According to earlier Fidelity Charitable studies, more than 75% of entrepreneurs say charitable giving is a critical part of who they are. Three-quarters of millennials identify themselves as philanthropists, compared to 35 percent of baby boomers, according to Fidelity.
Fidelity Charitable recommended advisors work with their clients on long-term planning, rather than having clients just write yearly checks, so that the clients can take advantage of tax savings. Clients also should consider donating appreciated assets to avoid paying capital gains taxes on the assets. This also makes more money available for the charity.