How to Talk About Philanthropy with Your Clients

Aristotle once said, “To give away money is an easy matter and in any man's power. But to decide to whom to give it and how large and when, and for what purpose and how, is neither in every man's power nor an easy matter.” This sentiment may be especially true for many of your high-net-worth clients who would like to make a positive impact with their wealth. As their financial advisor, you have the potential to provide some much-needed guidance, especially if they’re willing to incorporate the philanthropic conversation into their financial planning discussions. But where do you start?

Here, we’ll discuss how to talk about philanthropy with your clients, which begins with an understanding of the why.

Deepen your client relationships. Charitable giving is often a personal and meaningful topic for clients. Although many advisors consider charitable giving tools as tax-savings vehicles only, this is not how many clients see it. In fact, a 2014 study by the U.S. Trust reported that high-net-worth clients give because they believe their gift can make a difference or for personal satisfaction rather than for tax savings.

As such, introducing philanthropy in your financial planning discussions can provide an opportunity to develop a deeper relationship with your clients. Although technical conversations about taxation and estate planning will certainly remain a large part of the financial planning process, introducing the topic of philanthropy can help you learn about your clients’ passions, their history, their guiding morals, and how they envision their legacy.

Retain family assets. Research has shown that when clients pass away and their estates transition to their heirs, 90 percent to 95 percent of the time, those heirs are going to immediately move assets to their own financial advisors. This level of attrition can be crippling to any advisor’s practice. To help prevent this costly scenario, it’s important to engage clients’ family members in the planning process. One easy way to do this? Charitable planning.

Many charitably inclined clients have a desire to create a philanthropic legacy. By including younger generations in the philanthropic conversation, the family can shape their philanthropic goals together, preparing the younger generation to take over when the older generations pass on. If you actively include these younger generations, it is far more likely that they will keep assets with you when the estate transitions.

Obtain referrals by positioning yourself as an expert. In a 2013 study by U.S. Trust regarding the philanthropic conversation, 60 percent of advisors surveyed said that discussing philanthropy with their clients helped establish new relationships. Because so many high-net-worth clients want to include philanthropy in their financial plans, they need advisors with expertise in charitable-giving vehicles to aid them in giving strategically and effectively. By honing your skills in this area, you’re likely to generate referrals from high-net-worth clients satisfied with the charitable giving advice you have offered.

Now that you have an idea of why you should be talking about philanthropy with your clients, it’s time to get down to the how.

Start early. Frequently, advisors will introduce charitable giving vehicles as a solution to a tax or estate planning issue raised by the client. According to that 2013 U.S. Trust study, however, many clients would prefer that an advisor broach the subject of philanthropy early in the relationship. By doing so, you can incorporate philanthropy in your client’s financial plan from the start; set a clear vision of the client’s goals; and, as mentioned earlier, deepen your relationship.

Ask the right questions. In The Right Side of the Table: Where Do You Sit in the Minds of the Affluent? Scott and Todd Fithian write about the “planning horizon” as a model for discussions with clients. Conversations above the horizon address the deeper, more personal aspects of the client, while conversations below the horizon address strategic and product needs. When discussing philanthropy, try to stay above the horizon for the bulk of the conversation, asking open-ended questions about the client’s wishes, aspirations, morals, and charitable intentions. For example: 

• What type of legacy do you want to leave?
• What issues or causes are you most passionate about?
• What motivates your charitable giving?
• What values do you want to pass along to your family?

Once you have an idea of the client’s charitable goals, you can begin to address below-the-line strategic recommendations.

It is important to continue jumping above the line to determine whether or not the strategies you and the client have implemented are accomplishing the client’s charitable goals. In Give Smart: Philanthropy That Gets Results, Thomas Tierney and Joel Fleishman recommend addressing five key questions to determine the effectiveness of a client’s charitable giving: 

• What are your values and beliefs?
• What is “success” and how can it be achieved?
• What are you accountable for?
• What will it take to get the job done?
• Are you getting better?

By asking these questions, you and the client can measure the impact of the client’s philanthropy and make adjustments as needed.

Develop your expertise. Finally, to have a meaningful philanthropic conversation with your clients, it is imperative that you develop an expertise in this area. This can be achieved by reading some of the works cited here, attending planned giving conferences and seminars, or obtaining The American College’s Chartered Advisor in Philanthropy^® designation.

For many clients with charitable intentions, their desire to give is underscored by uncertainty about which causes to support, how their gifts will be put to use, and how to effectively give. These clients may choose not to give at all or simply write checks to organizations that request their donations. But by knowing how to discuss philanthropic goals with your clients, you can offer them a strategic, impactful, and winning giving strategy.

Do you regularly discuss charitable giving with your clients? How have you honed your skills in this area? Please share your thoughts with us below!