Financial Planning > Charitable Giving

Philanthropy Forum: Most HNW Clients Dissatisfied With Advice

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While many, maybe most, advisors may believe they don’t know enough about philanthropy to bring it up, their clients are giving to charity, whether advisors work on it with them or not. In fact, "79% of high-net-worth (HNW) investors are dissatisfied with the guidance they get from their advisor about philanthropy," according to Renata Rafferty, president of Rafferty Consulting Group and author of “Smart Generosity” (Seven Word Press, 2009), a book for advisors and donors.

At the 2011 Conference on Philanthropy, hosted by Advisors in Philanthropy, in Chicago, Rafferty spoke Thursday about “Marketing and Service Expectations of the HNW.”

Many advisors are good about getting clients up to the “charitable door," Rafferty argues. But, “What's on the other side of the charitable door?” she asks. This is where clients can use much more help, she says.

During the conference on Thursday, Bank of America National Foundation Executive Claire Costello, and Schwab Charitable President Kim Wright-Violich both said that “98%” of HNW investors give to charity. If they are not talking about that with you it may be that they are working on this with someone else.

"When did you last assist a client with a non-financial matter?” Rafferty asks. “These are the things that stand out more than performance. Service trumps performance."

“Anticipate their non-financial needs, concerns, challenges, worries, hopes. The money is a means or symptom of something. The non-financial needs can really touch,” your clients, Rafferty adds.

Starting  the Conversation

According to Rafferty, the “average American household donates $1,173 to charity each year. Every client is already giving money.” Ask if clients give to an alumni group or buy “wrapping paper from grandchildren.”

Ask them, she advises, “What are you currently giving to? How did you come to give to those things?”

Chances are you can deepen your relationship with your clients by asking five simple questions about philanthropy, Rafferty says, and helping them find the right expert to work with:

  1. “What is the area they are interested in making change in the world in? Get them to tell their story.”
  2. “Is there a geographic area [they’d prefer] for giving—local, national, international?”
  3. “What sphere of influence do they want to have—specific or broad?”
  4. “What’s their tolerance for risk? Do they need to give to Blue Chip charities, [like the] Red Cross, etc., where impact is more diffuse? Or smaller, newer nonprofits” that should have a "great social return," but more risk because they are “younger, smaller organizations?”
  5. “How philanthropically savvy are they?”

Investors have these “top complaints” about their advisors, according to Rafferty:

  • Not enough contact.” Clients want “14” contacts a year; but “6 is typical especially when times are tough.”
  • Rotten phone manners: not returning calls as soon as possible.”
  • Silo mentality 1:” the advisor says, “‘we’re here to talk about the numbers and your finances … maybe legacy,’ but [the advisor is] uncomfortable” with that.
  • Silo mentality 2:” the advisor is “not comfortable to talk about things other than money and won't bring in another professional.” Clients “want you to bring in the others, so develop these professional experts for the team.”
  • Dumb presents: clients don't want the wine, Godiva chocolate, tickets they can get on their own. They want the unexpected, when you first discover it, not because it's social obligation. Give them yourself.”

In short, Rafferty advises advisors to “Get good at what you don't do.”