The Philanthropic Initiative (TPI) first began examining philanthropic conversations between professional advisors and their high-net-worth (HNW) clients in the late 1990’s, when, believe it or not, “values-based” conversations were often viewed as too risky and personal. We knew that HNW individuals were interested in philanthropy, and we were anecdotally hearing that advisors were a key partner in how to do it well. We began to wonder, how can advisors better serve their clients in the field of philanthropy? What are client expectations for how advisors handle these personal topics and the funds entrusted to them?
To continually provide guidance for advisors, TPI has revisited this research three times, with the most recent results gathered in the 2018 U.S. Trust Study of The Philanthropic Conversation. The 2018 study continues our mission to help advisors understand the dynamics of and potential disconnects that happen during philanthropic conversations with their HNW clients. With that introduction, here are three findings that can help you have better conversations with your HNW clients about their philanthropy:
1. Start Early and See Yourself as a Resource
Twenty years ago, advisors didn’t feel it was their place to bring up philanthropy with their clients. Ten years ago, they raised the subject but didn’t go much beyond mentioning it as a tax strategy. Times have changed. Dramatically. Today’s clients expect the conversation to be raised by a good advisor. An interesting statistic from the 2018 survey shows that while advisors are doing a better job of talking about philanthropy with their HNW clients, there is still a disconnect about how the conversation happens – HNW clients overwhelmingly say they had to raise the subject first, whereas advisors are more likely to report that they brought it up. Don’t hesitate to ask clients whether they are ready to talk about philanthropy. They may have already discussed their ideas with those close to them, and professional advisors were ranked second only to spouses or partners as the most valuable source of information about philanthropy. If you consider how few people any individual feels comfortable with in discussing finances, your role as philanthropic guide falls into even sharper relief.
2. It’s Not About the Money (As Much as You Might Think)
Viewing philanthropy primarily through a financial lens, as advisors did years ago, is not what clients are looking for today. By the mid-2000s, donors began to push advisors to seek out greater competency on guidance around family and charitable goals. Yet advisors did – and still do – often misunderstand the impetus for giving, and thus assumed that any hesitation by clients on philanthropic matters is financial. That’s simply not the case. The top three reasons clients cite as hesitations are, in fact, about knowledge and confidence. Will their money be used wisely? Do they know enough about an issue or organization? And once they do give, how will they manage incoming requests by others who approach them in turn? The top reasons why advisors believe clients choose not to give, however, are about finances: that clients don’t believe there is enough money for themselves or their heirs, or they don’t believe themselves to be wealthy enough to give. The more you are aware of your clients’ real concerns, the more effective and important your counsel will become.
3. Get to the Heart of the Matter
The 2018 study underscores a second reason why the financial lens on philanthropy is outdated, and it’s good news for advisors. Clients trust that you know and will guide them through complex technical aspects of planned and charitable giving. They just don’t necessarily want to only hear about the technical details. In your time together, they want thoughtful, in-depth discussions about the good they can do on issues of importance. They want values-based conversations, and advisors need to be ready and willing to have them and deliver solutions that address client goals.
The disconnects that the 2018 study reveals offer incredible opportunities for advisors, specifically when it comes to growing your business. As with any professional relationship, understanding the client’s goals and hesitations in equal measure are key to higher client satisfaction. The more that clients get to the heart of their long-term goals – and find ways to empower their children, in turn – the more opportunities advisors have to deepen client relationships that last longer. In upcoming posts, we will offer more in-depth learning on these points, building on more findings from the 2018 study and our expertise in training and supporting advisors for nearly three decades.
TPI is committed to actively promoting and advancing strategic philanthropy by conducting cutting-edge research, publishing donor education resources, and training individuals, organizations, and advisors in best practices. TPI helps professional advisors build their capacity to meet the philanthropic needs of their clients by strengthening the internal culture of philanthropy within firms, and providing tools and resources to enable relationship managers and advisors to better support their clients and attract new clients. To learn more about TPI’s services and work with professional advisors, contact Lisa Spalding at lspalding [at] tpi.org or 617.338.5889.