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October 22, 2014 at 11:14 AM
The latest quarterly Investor Watch report from UBS indicates millionaire clients could stand to have a discussion with their advisors about charitable giving.
The report released Tuesday, “Doing Well at Doing Good,” found that almost all respondents said they have donated time or money to a charity in the last year (91%), and 55% have given both.
Furthermore, over a third of respondents have increased the amount of money they give.
However, just 20% say their giving is extremely or very effective, and only 40% reported feeling satisfied with their impact on their community.
Although over half of respondents to this edition of the UBS Investor Watch had at least $1 million in investable assets (millennial and Gen X respondents had a minimum of $100,000 and $250,000 investable assets, respectively), just 9% of respondents said they’ve discussed giving with their advisors because they feel those discussions are for the very wealthy.
Respondents who aren’t talking with their advisors are missing out, too. The report found that across all wealth levels, those who do work with an advisor on a charitable giving plan are more satisfied with their impact.
“We saw an inflection point at the $5 million level,” Sameer Aurora, head of client strategy for UBS, told ThinkAdvisor on Wednesday. “People who have north of $5 million in investable assets do tend to behave more like philanthropists.”
Aurora noted that it’s not just that those clients have more to give; “it’s actually more around the fact that they are more strategic and organized around their giving. They’re more thoughtful about it.”
Respondents with $5 million or more in investable assets also more likely to work with an advisor, Aurora said, and are more likely to use tax planning strategies “and therefore are more likely to feel satisfied with the effectiveness and outcome of their giving efforts.”
Less wealthy millionaires were more likely to engage in “checkbook philanthropy,” Aurora said; writing a check for various causes when they’re approached by friends or family rather than following a strategic giving plan that maximizes their efforts.
Advisors who want to help increase their clients’ satisfaction should initiate conversations about charitable giving, Aurora said. He noted that the fourth quarter is a good time to reach out to clients on this topic.
“Most of the giving that takes place happens in the last two months of the year,” he said. “Being more proactive and looking beyond the end of the year, it’s a good time for clients and investors to sit down with their advisors and for advisors to initiate the conversation with their clients around, ‘What are your giving goals and plans for the following year? What are the causes that you want to support?’”
He added that it’s a good opportunity for advisors to begin multigenerational conversations, too, by asking how clients want to get their adult children involved.
