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Financial Planning > Charitable Giving

Helping Clients Be Charitable Is Good for Advisors’ Business: Foundation Source

By Emily Zulz

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Helping clients give money away isn’t just good service, a new survey from Foundation Source finds that it can actually be good for one’s advisory practice, too.

Foundation Source on Thursday released the results of a survey that shows how an advisor’s philanthropic knowledge and guidance around charitable vehicles might impact their practices.

The survey included responses from 106 wealth managers across the country working with small, midsize and large financial institutions, as well as registered independent advisors, family offices and philanthropic consultants.

(Related: How Couples Give to Charity)

According to the survey, recommending a charitable vehicle can result in managing those assets.

The survey found a correlation between providing guidance around charitable giving vehicles and potential for managing those assets. According to the survey, 57% of advisors who originated the idea of a private foundation also manage those assets. In addition, 29% of advisors who originated the idea of starting a donor-advised fund also manage those assets.

The survey also found that regular conversations around philanthropy strengthen client relationships and build new ones.

“When the advisor originates the idea of a [charitable vehicle], the client sees them differently,” Joseph Fuschillo, Foundation Source’s chief distribution officer, told ThinkAdvisor. “They become a trusted advisor and they become the steward of the assets.”

The survey finds that nearly all of the respondents (99%) said that at least some portion of their clients are charitable and half said that the majority of their clients are actively engaged in giving.

According to Page Snow, chief philanthropic officer at Foundation Source, high net worth individuals “expect their advisors to provide that kind of information.”

The trouble is that most clients don’t ask for information about charitable vehicles. And, not all advisors are bringing up these conversations consistently with their clients.

According to the survey, 54% of respondents said that fewer than 10% of their clients had asked for information about either donor-advised funds or private foundations.

“It showed that clients aren’t necessarily the ones to raise this topic,” Snow told ThinkAdvisor. “I think the advisor needs to make sure that he or she makes it clear that this is something they can help you with.”

However, the survey finds that only 24% of the respondents bring up philanthropic conversations at most every client meeting and 42% bring these conversations up with clients “often.”

“A lot of times, in the survey, advisors said that they didn’t bring it up at times because they were uncomfortable with the topic,” Snow told ThinkAdvisor. “Other times, the feedback we’ve gotten is that sometimes they feel it’s too personal a topic to bring up. It’s something that [advisors] really need tips on how to initiate the topic.”

Respondents who said they “never” (3%) or only “sometimes” (31%) discuss philanthropy with their clients cited the following reasons: perceived lack of client interest (65%), not a priority for them (15%, too personal to ask about (9%) and unsure of their topical knowledge (9%).

Fuschillo’s advice to advisors is: “Feel comfortable having the conversation. Be proactive and initiate the conversation because your best clients expect it.”

The results of the survey suggest that in order to provide high-net-worth clients with a comprehensive, high-level service, wealth managers and advisors are expected to incorporate philanthropic services into their practices.

Fuschillo notes that philanthropic services can also provide another “value add” for clients.

“Advisors are searching for ways to set themselves apart,” Fuschillo told ThinkAdvisor. “So much of their world is focused on investment performance and investment-only products … but if they want to help [their best clients] holistically, we feel like charitable giving is a differentiator.”

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