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Financial Planning > Charitable Giving

Occupy Main Street

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Every business impacts five constituencies: its clients, stakeholders, vendors, employees and community. To excel, advisors must consider how their decisions and actions affect their relationships with these groups. Each constituency can be a powerful advocate for their firm—or a powerful detractor. Each interaction

helps define the firm’s brand and priorities. The resulting perceptions shape the image of the specific firm as well as the reputation of the industry in general.

Consider the events of recent years. I recall a conversation with the wife of a managing director at Lehman Brothers. She pointed out that among the unfortunate casualties of the firm’s collapse were the millions of dollars in charitable contributions that were lost with it. Included in those millions was a special initiative to help young inner city women who were without resources go to college. Now Lehman’s legacy is not about the great measures they took to help others, but the devastation they wrought on thousands of employees and beneficiaries left floundering in the wake of their failure.

There is a common and pervasive misperception that this profession  solely comprises rigid Ayn Rand acolytes. Rand’s free market philosophy, as captured in her novel “Atlas Shrugged,” promoted the idea of individuals living only for their self-interest and rejecting altruism.

In reality, financial services firms large and small make a positive impact in their communities that often goes unrecognized. Part of this desire to remain “low-key” stems from the current climate; these days, it seems any connection to this business incurs the wrath of the misinformed. That’s not to say the industry hasn’t brought reputational problems upon itself, but it is unfair to declare that a relatively small group of miscreants represent the greater financial services population or that the pursuit of profits is the single-minded objective of all financial professionals.

Not only have clients developed wariness and suspicion of financial services firms, potential new talent has also been shying away from the industry in part due to the reputational taint. Young career seekers are motivated by not only the financial rewards and intellectual challenge of a job, but the desire to use their talents, time and money to benefit others. If they knew more about the exemplary ethical and moral standards and practices of many financial professionals, they might have a different view of this industry as a career option.

Now as much as ever advisors can achieve personal fulfillment in the financial advisory business by profoundly improving the lives of clients and contributing to the community in a meaningful way. How compelling of a proposition is that to people you want to work with or employ?

These are important times for Wall Street and the thousands of Main Street financial services organizations that have been ridiculed and excoriated for making money while many are losing homes and jobs. What is often overlooked in the editorials, handcrafted posters and graffiti is the positive impact that this business has on the less fortunate, done in a way that is the choice of the giver and not the mandate of the governor. I’m not talking about the “redistribution of wealth,” but the actual and long-standing tradition of giving back by a profession that engenders and manages wealth, but still has a noble nature.

A great example of this community spirit in financial services is the Foundation for Financial Planning ( In October, the Foundation crossed a milestone in making their 100th grant to help organizations provide financial planning to people who can’t afford it and teach financial life skills to those who never learned them. Beneficiaries include military families, the recently unemployed, homeless people who are deep in debt and young disadvantaged adults who are just trying to find their way.

In the spirit of full disclosure, I served on the Foundation board for a period. At each board meeting, I found the testimonials of representatives to be truly moving. I remember being inspired by three young women who participated in a Foundation-sponsored program at Goodwill in Charlotte, N.C. They talked about how the information they acquired enabled them to eliminate their debt and focus on savings instead of spending. They were empowered to change their lives.

Recently, I heard another moving story from two disabled veterans, one who served in the war in Iraq and the other in Vietnam. The younger veteran was an enlisted private, the elder was an officer. The young veteran said, “As veterans, we don’t have a lot of resources. We tend to rack up a lot of bills and a lot of debt, and we outstrip our ability to repay them. Especially on VA (Veteran’s Administration) pay.” Through the Foundation’s sponsorship of a local Financial Planning Association chapter’s pro bono efforts, he worked directly with a financial planner to learn how to get control of his financial life. Now he is pursuing a master’s in psychology and working for the State Council for Independent Living.

The disabled officer has been toiling on behalf of other veterans through Networking Warriors of America almost since he left the Army. Through this work he learned of the Foundation’s support of military families. He said, “One thing that is never included in officer training is personal financial planning. Further,” he went on, “nothing in the DOD (Department of Defense) transition out of the military is related to financial planning. When you get out, you don’t know how your assets, benefits and income will support you because it all just changed. It’s a big shock.” This is a rather disturbing revelation in a country teeming with bumper stickers urging us to “Support Our Troops.”

In a perfect world, all young adults would leave the nest armed with the basic skills they need to live a successful life. But as behavioral scientists tell us, proper behavior must be taught to children so they know how to apply it as adults. Many people are born to parents who lack financial life skills or who don’t take the time to teach them, and schools have been eviscerated to the point where critical personal developmental lessons are diluted or absent from the curriculum.

How many clients or children of clients have we met who make a lot of money, yet have little understanding of compounding, risk/return relationships, credit management, household budgeting and other fundamentals of personal financial management? Imagine if they didn’t have the earnings power or the luck of inheritance that allowed them to accumulate assets. How would they manage?

The Foundation for Financial Planning is funded by individual financial planners and the corporations that support them including mutual funds, broker-dealers and custodians, none of whom seek glory or recognition for this initiative. In the true spirit of giving, the contributions are made because it’s the right thing to do. The Foundation is independent of any financial planning organization or membership group. It was initially started by a predecessor of the FPA and continues to have a strong connection to them, but the mission and reach of the Foundation has extended to include financial planning professionals affiliated with multiple organizations. In addition to serving as a conduit for efficient investment in worthy non-profit organizations, it provides a vehicle for advisors to donate their time and expertise to people in need.

Think about your five constituencies and what you hope to accomplish in your career. In business it is tempting to view success through the prism of financial assets and growing personal income. But satisfaction comes from knowing our business can not only serve clients, stakeholders, vendors and employees, but also people at large. You may find that when you develop your strategies with an eye to also serving the community, your firm will realize a benefit that transcends any new and clever marketing initiative.


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