“He had never given any thought to what would happen to his money, but we found that he has an opportunity to make a difference, a real difference, in whatever issues he feels are important,” Martin says. “He became excited when we sat him down to show our reasoning using the outcome of a Monte Carlo analysis. The obvious answer to what to do with the money was charitable gifting. He had already started to do that, but modestly, so we told him that he needed to start thinking bigger.”
Martin says that for clients accustomed to living modestly, advisors shouldn’t expect them to suddenly start spending lavishly in retirement.
“Money habits are hardwired at a young age and don’t change for most people regardless of their account balance,” Martin says.
Since a sizable portion of the portfolio was not tax deferred, Martin says his client began by gifting appreciated assets. “That was a win-win situation that he really liked.”
Martin and his client established trusts to fund retirement and long-term care needs, and had already identified the children of a few close friends that would become beneficiaries of his estate.
“Those were going to be some very lucky kids—and they still will be, but he’s now going to include some non-profit organizations in that equation,” Martin says.
Since Monte Carlo simulations have become good predictors of retirement success, Martin says that planners should be able to introduce additional possibilities for giving around estate planning.
“It’s even more powerful if you can introduce them to the possibility of sharing gifts while they’re still alive,” Martin says.
Yet Valas cites research that shows only 14 percent of advisors currently offer advice around philanthropy.
Giving should start with a client’s passion—clues can be found in the way the wealthy start or run their own businesses.