Wealth advisors know that high-net-worth clients typically look to them for guidance around their charitable giving. That’s why conversations around philanthropy are increasingly commonplace—especially during year-end client meetings.
However, there’s a big difference between “having a conversation” and having a productive conversation. Our experience managing more than 1,400 private foundation clients suggests that when it comes to advising their philanthropic clients, there are three distinct traps for the unwary advisor:
• Sticking to dollars and cents: Wealth advisors sometimes assume that when a client asks for philanthropic advice, they’re primarily interested in tax savings (income tax reduction, sheltering capital gains, avoiding estate taxes, etc.). But what really interests your clients about philanthropy—and what they really want from you—may have nothing to do with money. Your clients may want you to serve as a resource, providing logistical and strategic support for their charitable objectives.
• Making it seasonal: If you’re only discussing philanthropy during pumpkin-spice latte season, you may not be doing it at the right time or with sufficient frequency. Yes, interest in philanthropic giving typically spikes during year-end, but some clients want to discuss giving earlier in the year when there’s more time to plan. And many clients want to discuss their charitable giving with you on a regular basis—not just at a year-end meeting.
• Going it alone: When clients have complex needs, or their philanthropy represents a substantial investment, it makes sense to confer with specialist in charitable vehicles. A recent Foundation Source surveyrevealed that advisors may have misplaced confidence in their knowledge of private foundations and donor-advised funds, which could affect the quality of their counsel.
To help you serve your clients, this article offers specific suggestions for discussing charitable giving with clients who:
• Are just beginning to consider their needs;
• Are actively comparing charitable vehicles; or
• Have established private foundations.
Whether or not your clients have a formal giving vehicle (or have even begun to contemplate the need for one), the following sets of questions will help you understand their goals, priorities, and challenges.