Thursday, October 2, 2014

Philanthropic motivations and the role of the advisor

A joint U.S. trust study by The Philanthropic Initiative and the Bank of America has shown several discrepancies between the ways in which high net-worth (HNW) individuals and their professional advisors view philanthropic goals, motivations and conversations. Using a sample of 312 advisors and 119 HNW individuals, some of the key findings of the study which could be especially relevant to family enterprise advisors are as follows:

  there are several disconnects between HNW individuals and advisors centering on the initiation and substance of philanthropic conversations
  philanthropy today is a pivotal consideration that should take place at the front end of the wealth structuring process
  only 55 per cent of HNW individuals say they discuss philanthropy with a professional advisor
  51 per cent of HNW individuals say they are typically the one to initiate the conversation on philanthropy
  what matters more to HNW individuals than who initiates the conversation is the discussion be held in a meaningful way early in the relationship
  34 per cent of HNW individuals feel the topic should be raised during their very first meeting and 90 per cent agree it should occur within the first several meetings
  63 per cent of HNW individuals report that ensuing discussions about charitable giving centers on more technical issues and 27 per cent say the discussions center on their goals, values and interests
  the study illustrates several ways in which HNW individuals and their advisors’ views differ, including the reasons why HNW individuals don’t give or are reluctant to give
  the vast majority (71 per cent) give strategically and have a plan for their giving
  31 per cent say they would be more likely to choose an advisor who is knowledgeable about charitable giving
  75 per cent of advisors find discussing philanthropy is an excellent way to deepen relationship and establish new relationships
  40 per cent of HNW individuals report that discussing philanthropy with an advisor has deepened their relationship

               “While many HNW individuals rely on the technical expertise of their advisors in this area, they are also seeking conversations that are deeply meaningful on a personal level,” said Jim Coutre, a partner with The Philanthropic Initiative, a collaborator in the study.

What is your experience with philanthropic conversations with your clients?

Would you say that your HNW clients would agree with these results?


  1. Philanthropic advising services are no longer seen as a value add; rather, they are seen as a must have service for wealth management services. It is clear that the desire to give is shared by many HNW clients; in fact many inform their advisors of their philanthropic desires, but do not do so as part of an overall planning process, rather as a side bit of information. One observation is that clients seem to expect FAs to initiate the conversation as it pertains to tax planning.

    I am often asked how I go about directing a client to charity. My response is always the same: the client does the directing, and I merely do the asking. The questions I ask start from a high level about how charitable decisions are made, how social engagement is modeled, and what commitment level they want to have with the organization. From there we drill down to what their social vision is, we craft a family mission statement (because every action feeds back to a mission), and thofen we look at organizations. Throughout this conversation, risk tolerance and expectations on deliverables are being assessed and identified.

    It is up to FAs to approach philanthropy with the same focus as they do with other aspects of wealth management, and to arm themselves with the proper tools and resources to have access to the charitable information they can use for philanthropic conversations. Financial institutions can work with the charitable sector to bridge the knowledge gap and identify organizations that are effective, efficient, transparent, and who can show proof of impact.

    As noted in the FEA blog and other articles published over the past several years, we are facing the largest inter-generational wealth transfer in North American history, and the services required from advisors for families and individuals have evolved. One of these evolutions is in the information gathering and advising space on philanthropy.