From the August 2007 issue of Boomer Market Advisor • Subscribe!

Getting more out of giving back

Here's a brainteaser: What's the point to an advisor recommending a charitable giving maneuver to a client when executing that maneuver ultimately will reduce the advisor's assets under management?

It's a conundrum that many financial professionals must grapple with as they weigh the ramifications of developing expertise in planned giving. According to philanthropy expert Charles B. Maclean, Ph.D., the answer is clear once the advisor considers all the costs and benefits, tangible and intangible, of emphasizing one's gift planning expertise. The pros of doing so far outweigh the cons, says Maclean, principal at PhilanthropyNow in Portland, Ore.

"What I hear most from the advisors with whom I work is that nothing they do is more satisfying than helping clients give their way."

That sense of satisfaction comes primarily from the following areas:

  • The chance to take relationships with clients to a new level of trust. To build trust, Maclean suggests fostering a philanthropic dialogue with clients without advocating a particular charity or dollar amount for a gift. If the client's best option also happens to cut into the assets the advisor is managing, so be it. "You're looking at long-term relationships with clients and clients' families, and putting clients' wishes first."

  • The opportunity to leverage this deeper trust to gain access to other aspects of a client's portfolio. "If you really develop an intimate understanding of a client's values, there is probably going to be more business for you as a natural byproduct of that," explains Rod Zeeb, JD, president and CEO of the Heritage Institute, an organization that trains advisors in a process for fostering philanthropic activities among clients and their families.

  • The chance to forge relationships that bridge the gap to other members of clients' families and later generations. "Discussions of philanthropy tend to turn into a family issue," notes Richard L. Fox, JD, the Wallace Chair in Philanthropy at the American College, where he presides over the chartered advisor in philanthropy (CAP) program. "There's your opportunity to get acquainted with clients' children, which is your next level of client."

  • The means to network and develop relationships with attorneys, CPAs, money managers and the like, as well as with donors, trust officers and officials from charitable organizations.

  • The chance for an advisor to create a more rounded practice and fulfill his or her own personal desires to "give back";

  • The opportunity to help clients realize their philanthropic goals;

  • The chance to catalyze a charitable mindset among clients who might otherwise not be so inclined -- to become what Maclean calls a "gate-opener to giving."
Financial planner Kimberly L. Curtis, CAP, CFP, principal at Hinrichs Curtis & Associates in Denver, found these opportunities too compelling to ignore. Several years ago, in the wake of the stock market nosedive and 9/11 terrorist attacks, she and her partners took a hard look at their personal and professional goals. Ultimately they decided to make the cultivation and execution of client philanthropy one of the strategic thrusts of the practice. They haven't looked back since.

"What I realized," she recalls, "is how insular we can get in our profession and how important it is to expand our professional world. So I sent out a letter to all my clients, saying things were changing and I wanted to meet with them to explain. When I presented it to them, many were actually relieved."

It's no coincidence, she says, that since that turning point, her practice has been significantly more prosperous.

Plugging in

To immerse herself in the philanthropic world, Curtis was part of the first class to earn CAP designation. To network and stay plugged into the philanthropic community, she later joined the International Association of Advisors in Philanthropy. Many of her colleagues also lean heavily on the National Committee on Planned Giving for similar reasons.

The Heritage Institute and the American College offer two of the most prominent programs for training advisors in philanthropy. In many respects the CAP and the Heritage Process (THP) are complementary programs. The technical aspects of developing and executing giving strategies are a key focus area for the CAP program, Fox explains. According to Zeeb, THP is a less-technical six-step program emphasizing approaches advisors can use to nurture a sustainable philanthropic mindset among families across generations. Emphasizing cross-generational philanthropic continuity is crucial, notes Curtis, pointing to the fact that 70 percent of estate plans ultimately fail within two generations. "The wealth disappears and it with it, family harmony."

The American College, according to Fox, launched the CAP program several years ago with the premise that "if more advisors understood philanthropy, there would be more [charitable] giving." The three-course program covers the fundamentals of planned giving, then goes deeper into the tools and methods for planning and executing giving strategies, from trust structures to tax implications. "There are a lot of vehicles out there and a lot of traps," says Fox. "It's important for advisors to know where those traps are."

Maclean suggests using the following criteria in choosing an educational program:

1. Does the organization itself give back to the community?

2. Does the curriculum content allow individuals to "test out" of at least a part of it?

3. Does the training get beyond lectures to case studies, role-playing, etc.?

4. Does the organization adhere to rigorous ethical standards?

5. Is meaningful recertification required?

6. Is mentoring and observed client interaction part of continuing support?

7. Is the focus on collaboration (with other advisors, etc.)?

8. Is the program values-based, putting the needs of the client/donor ahead of the assets under management mindset?

Selfless selfishness

While the motives for beefing up one's presence in philanthropic circles may be largely altruistic, there's no ignoring the potential bottom-line benefits to developing expertise in charitable giving strategies. How can advisors go about leveraging that know-how? Here are some suggestions from Maclean:
  • Walk the talk. Be philanthropic yourself so you can speak from personal experience and be credible with clients. "I'm a firm believer that we can only take clients as far as we have gone ourselves," Curtis says. Adds Maclean: "If you're not giving yourself, you probably will not be comfortable raising the issue of giving with a client."

  • Craft your own personal giving mission (using a researched profile for a model) so you can do the same with your clients.

  • Earn your spurs by serving your favorite nonprofit or community foundation. "Find organizations you are passionate about and go volunteer there," suggests Zeeb. "There's no better way to learn how non-profits work and what their real needs are." And keep in mind, these affinity relationships can yield quality prospects.

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