5 things professional advisers should know about charitable giving

Clients are more likely to stick with professional advisers who can offer relevant advice throughout the client’s lifetime. For this reason, an increasing number of advisers are focusing on understanding clients as individuals with radiating circles of needs and interests.

For younger generations especially, one interest increasingly central to their lives is charitable or values-driven activities. Advisers who recognise, and even celebrate, the desire of clients to incorporate charitable giving into their broader financial planning strategy better meet their clients’ wider needs. Here’s why:

1. The inter-generational wealth transfer is coming

According to mutual insurer Royal London, over £400 billion held by Britain’s baby boomers is expected cascade down through the generations to the benefit of millennials in the coming years. That’s independent of the $30 trillion that will transfer across generations in America.

Many of these younger people will be looking for help managing, growing and even giving away their new-found wealth—oftentimes in very different ways than their grandparents did. Professional advisers who are prepared for this new breed of client can stand out from the crowd as values-focused millennials look for help using their money to act on their passions.

2. The majority of heirs change their advisers upon receiving their inheritance

Professional advisers who don’t pivot to meet the interests of younger clients are in critical danger of losing them. Studies show that anywhere from 66 to 90% of people inheriting wealth drop their parents’ advisers and look for professionals better positioned to help them use their money on their terms.

3. Offering advice about charitable giving strengthens client-adviser relationships…and offers an opportunity for conversation with your clients’ children

By meeting client demand for philanthropic services, you become more than a professional adviser focused on one specific area of your clients’ lives. You evolve into a trusted adviser, rooted to the central interests and passions of your clients and their families.

Who is asking for these services? While your current clients may be interested in charitable giving, your clients’ millennial children are expecting it. Millennials are already asking for more support crafting investment portfolios that match their social values.

If you position yourself as an adviser who helps clients create giving plans that leverage their donations in support of the causes they are passionate about, you’ve set yourself up to be the adviser of choice for the next generation.

4. Millennials and women want to give differently

Ready to be a philanthropically hip professional adviser? The next thing you’ll need to know is that millennials don’t necessarily want to give to their fathers’ (or mothers’) charities. This group of people wants:

  • Opportunities to talk with their peers about giving. Millennials were raised on crowd-funding and social media campaigns like the #icebucketchallenge. They see charitable giving as a social activity and are much more likely than their parents to form giving circles and involve their friends and networks in the causes they care about. You can support this by connecting young philanthropists to each other through community foundations or local giving groups.
  • To give to more human-centric issues like homelessness and social injustice. While older generations are more comfortable giving to medical research and religious institutions, younger givers are putting their money behind charities tackling racial injustice, economic disparity and other issues that affect more diverse populations.

And women, specifically:

  • Give more than men do overall and prefer to use experts to help inform their charitable giving.
  • Are more likely to want opportunities to volunteer and become personally involved in the charities they support financially.

5. Starting the conversation about charitable giving is easier than you think

If broaching the topic of philanthropic giving with your clients seems daunting, try asking some basic questions to get the conversation flowing and demonstrate what you already know about them:

I know you’ve given to community groups before. Is charitable giving something you’d like to work into your overall financial plan?

Would you like your philanthropic work to continue beyond your lifespan? Have you talked with your children about how they might take part in your giving?

We have resources on charitable giving that other clients in your situation have found useful. I’d be happy to share them with you and set up a time when we could talk about any questions you have.

By incorporating conversations about charitable giving into your client interactions, you strengthen and deepen your relationship with clients. And that’s good for you and your client.

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