Philanthropy is personal. The ways in which we give away our hard-earned money are rooted in our family values, life experiences and world views. How we give is a reflection of who we are and what matters most to us. For advisors seeking to create deeper connections with clients, charitable giving can be a powerful topic to explore. Helping clients realize and execute an effective giving strategy builds trust and elevates an advisor’s ultimate purpose beyond investments and portfolio management to something more meaningful and valuable.
Understand Your Clients’ Values
To support your clients’ goals in maximizing their charitable impact, you first need to understand their values and charitable focus areas. Start with some questions to understand the causes most important to them, and how they want to focus their giving:
- What cause is most important to you?
- Who will benefit from your support?
- Where will you focus your giving?
- What common values are driving your goals?
The discussion around these nonfinancial, emotional questions will equip you to guide your clients in how to maximize their financial assets to drive these goals forward.
Adding Complex Assets to the Conversation
One way advisors can add value around charitable giving is by bringing up strategies that maximize the impact and tax benefit of philanthropic gifts, such as donating complex assets through a donor-advised fund (DAF). Assets such as private company stock, LLC or limited partnership interests, and even artwork and real estate, are often overlooked when it comes to a philanthropic plan. Yet complex assets gifted through a DAF can be a powerful charitable giving strategy.
As clients approach retirement and think long term, they are focused on simplifying their financial picture. Advisors can help develop a tax-efficient exit strategy for their business and related complex assets to guide clients as they consolidate their holdings and focus more on succession planning. This is a natural jumping-off point to start talking about charitable giving at a time when clients are thinking about their goals around impact and legacy.
Advisors can add real value in the process of setting up a DAF, starting with encouraging clients to be proactive about complex asset donations and identifying windows of opportunity.