In my blog last month (Charitable Giving: Good for Clients’ Charities, Taxes and Financial Plans), I discussed the charitable planning opportunities that have resulted from the five-year bull run in the equities markets. Building on that theme, here I’ll focus on a simple strategy for achieving clients’ charitable goals—one with which all financial advisors should familiarize themselves.
Do You Know Your Clients’ Charitable Goals?
Many advisors strive to be the go-to resource for all things in their clients’ financial lives, but you just can’t be that resource unless you include a discussion of your clients’ philanthropic goals. When I assist advisors in developing financial plans, I always ask if the client has any charitable intent. Many advisors immediately say, “No, my client wouldn’t want to give away any of their money.”
Rather than dropping the subject, I tend to press a little by asking if they have a copy of the client’s most recent Form 1040. I tell them to take a look at line 19 on the Schedule A and tell me what’s there. Rarely is the answer “nothing.”
My point, of course, is that many clients regularly give to charity, but their advisors simply assume that they don’t because they’ve never explored the issue. Keep in mind that clients don’t need to have the mega-wealth of a Warren Buffett to have philanthropic aspirations, nor do they need to worry about complicated giving strategies such as private foundations and charitable trusts.
The Donor-Advised Fund: A Simple Choice
For clients who have been making modest annual gifts to charities from their checking account, you can help enhance their tax efficiency with a donor-advised fund (DAF).