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July 19, 2018 at 01:50 PM
Advisors and their wealthy clientele are engaging in more frequent conversations about philanthropy, but advisors still fail to fully grasp their clients’ motivations and hesitations about charitable giving, U.S. Trust reported Thursday.
A study by U.S. Trust and The Philanthropic Initiative found, for example, that many advisors underestimate their clients’ desire to discuss philanthropy early in the advisory relationship and overestimate the importance of tax benefits as a motivation for giving.
(Related: Fewer Americans Donating to Charity)
Still, clients consider advisors an important source of information about philanthropy, second only to their spouse or partner, the study found.
“Charitable giving is an important dimension of an individual’s or family’s wealth experience, and the role of the advisor is correspondingly so,” Ann Limberg, head of philanthropic solutions and family office at U.S. Trust, said in a statement.
“Therefore, the better advisors are at addressing their clients’ philanthropic needs, the more likely they are to enhance their client relationships and grow their business.”
The study’s findings were based on an online survey Phoenix Marketing International conducted in May of a random sample of 314 advisors — including wealth advisors, trust and estate attorneys, accountants and other tax professionals — and 103 individuals with $3 million or more in investable assets who are actively engaged in charitable giving.
Ninety-one percent of advisors in the survey said discussing charitable giving with their client was important, and 53% said it was very important to do so.
Eighty percent of advisors made it their practice to ask clients about philanthropy, compared with 71% who did so in an initial survey conducted in 2013.
The vast majority of advisors said they discussed philanthropy with some of their clients, and four in 10 discussed it with a majority of their clients.
The survey found that advisors were initiating philanthropic conversations with a mix of technical topics, such as tax benefits and estate planning, and personal topics, such as passions and goals, which align to clients’ reported preferences.
Seventy-six percent of clients who discuss philanthropy with their advisor rated their advisor’s ability to discuss their personal values and charitable goals as strong, up from 63% in 2013.
“Clients rely heavily on their advisors for guidance with their giving,” Claire Costello, national philanthropic practice executive for U.S. Trust, said in the statement.
“Advisors who approach these conversations in a meaningful way — focusing on personal goals and passions as well as the more technical aspects of giving — are more likely to satisfy their clients’ philanthropic needs while also growing their business.”
The Value of Advice
According to the study, advisors correctly gauge high-net-worth clients’ chief motivations for giving, namely, passion for a cause, effect on the community and a desire to give back.
However, they misperceive the importance of reducing taxes and enhancing the family name or business as motivations.
