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Financial Planning > Charitable Giving

How Charitable Giving Helps Advisors Stand Out

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The media has given charitable giving center stage with Mackenzie Bezos’ recent announcement that she will give half of her $37 billion fortune to charity.

But it’s not only billionaires who are concerned about doing good with their money. In 2017, Americans gave over $400 billion to charity—the first time the $400 billion mark was crossed in history.

It’s clear that charitable giving is important to many Americans. For financial advisors, their needs to be an awareness of how to assist their clients in being charitable — and in how that charity can help keep them financially healthy as well.

Making charitable giving a focus in financial planning and the client experience can help to set advisors apart and better align their values with their clients.

Tax-Efficient Plus

It’s a given that clients want their advisors to help them manage their taxes well. In my experience, though, most often advisors tend to focus on other tax mitigation strategies before considering how charitable giving can play a role in tax-efficient planning.

Advisors are trained to look at factors like education expenses, analyze retirement income, and look years into the future with estate planning strategies to ensure heirs retain most of a family’s wealth. But in doing so, charitable giving tends to be shuffled to the end of the list, if it’s included at all.

Given to the power of charitable giving, this is a critical error.

Discussing a client’s philanthropy can be a touchy subject, but it doesn’t have to be an awkward conversation. Presenting charitable giving as a tax-mitigation strategy can be an easy way to nudge clients toward thinking more about its role in their financial well-being, and make it a natural part of the conversation at the same time.

Strategies for Giving

If you want to begin including charitable giving as a central part of your financial planning process, it helps to know where to start.

First, start by analyzing your firm’s culture. If charitable giving is part of its mission, it will likely resonate more strongly with the people who choose to work with you.

Additionally, consider different strategies for different types of clients.

An ultra-high net worth client may want to establish an endowment or foundation as the most appropriate way for them to give back to causes important to them.

For mass affluent clients, however, educating them on the value of Donor Advised Funds may be a good option. The initial investment amount is low, so almost anyone can use this account type to help create a more structured and methodical approach to philanthropy.

Above all, uncovering your clients’ propensity for charitable giving begins with simply having a conversation. Start by asking them how they view the role that charitable donations should play in their finances to gauge its personal importance to them.

As with any other element of financial planning, understanding each individual client’s goals will shape the discussion in the most profitable direction.

Adding a Charitable Focus 

There are two core benefits to implementing a charitable focus.

First, these kinds of personal discussions can lead to deeper client relationships, because you are talking about more meaningful topics than what a client can expect for their next tax bill. It also get to what your clients care about.

Second, if charity is a firm-level focus, it can help drive your marketing. Philanthropy gives you a focus to discussing what’s important to your firm core values; in turn, that focus can lead to you working with more clients who hold the same values as your team.

Ultimately, you may attract and retain better clients.

Keep in mind, a discussion about charitable giving is not a one-time conversation. Taxes are a certainty of life, so giving as part of a tax management strategy will never go out of style. Likewise, charities will always exist and have needs of their own.

Encouraging clients to be both tax-efficient and do good at the same time is a win-win, and it balances their focus on what is needed and helping and serving others.

By making charitable giving an active part of your conversations, you can change for the better how your clients think about their financial plans.


Jarrod Upton, MBA, MS, CFP® is Chief Operations and Senior Consultant at Herbers & Company, an independent growth consultancy for financial advisory firms. He can be reached at [email protected].


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