How Talking to Clients About Philanthropy Benefits Advisors

Fifty-three percent of advisors said they plan to increase their knowledge about impact investing, while 44% said they will integrate charitable goals into wealth plans and 43% said they will familiarize themselves with nonprofit organizations and community/social needs.

According to the survey, 78% of wealthy clients said they use at least one structured giving vehicle, such as a donor-advised fund, a charitable trust, a private foundation or a giving circle or collaborative. This is up from 43% in 2018.

Ninety-five percent of advisors said philanthropy is important to building relationships with clients' families, up from 71% in 2018. Three-quarters of wealthy clients agreed that including extended family members in philanthropic conversations is important.

While advisors and clients both agreed that discussing philanthropy is not only important but also an obligation, the survey found room for greater client satisfaction.

High-net-worth clients reported that they discuss philanthropy more with advisors than anyone else, but 28% said they receive the most guidance from their spouse or partner. Twenty-three percent said they get guidance from philanthropic advisors and only 19% said it comes from professionals, including wealth advisors, trust and estate attorneys, and tax advisors.

Ninety-five percent of surveyed clients reported that their advisors are knowledgeable about philanthropy, yet only 61% expressed high satisfaction with their philanthropic discussions. This, though, is up from 45% in 2018.

Opportunity for Better Advisor-Client Alignment

TPI's research indicates that advisors have a meaningful opportunity to strengthen relationships by gaining deeper insight into clients' motivations and hesitations around giving.

Advisors in the survey listed these reasons why they believe that high-net-worth clients engage in charitable giving:

— Inspiration for others, 51%

— Passion for a cause, 47%

— Desire to give back, 46%

For their part, clients said they give mainly for these reasons:

— To make an impact, 53%

— It feels good, 50%

— Desire to give back, 49%

Inspiring others ranked 11th out of 12 reasons that clients said they give. Moreover, only 21% of clients said the desire to reduce taxes was important, compared with 40% of advisors who said it was.

The survey also found significant differences between advisors and high-net-worth clients about why the latter hesitate to make charitable gifts.

Thirty-two percent of advisors believe their clients hesitate to give because of not enough money for themselves, 31% because of worry that gifts will not be used wisely and 30% because of lack of knowledge or connection to charities.

Twenty-four percent of clients explained their hesitations about giving as worry that gifts won't be used wisely, 19% lack of knowledge or connection to charities and 19% that there will not be enough left for heirs.

Advisors Poised to Meet Growing Client Demand

Three-quarters of advisors in the survey have engaged in educational programs about philanthropy, and 85% said they plan to increase their knowledge about philanthropic topics, up from 63% in 2018. High-net-worth clients said this aligns with what they are seeking.

Seventy-five percent of clients said they are more likely to choose an advisor who is knowledgeable about philanthropy, well up from 40% in 2018.

Eighty percent of clients said they would want their advisors to refer them to a philanthropic specialist to address needs beyond their advisor's knowledge, and 87% of those who need specialist advice reported being referred.

Nearly all advisors in the survey and two-thirds of clients said they are very familiar with at least one type of giving vehicle, but clients said they are eager to expand their knowledge.

Among clients, 51% said they want to learn more about giving vehicles, 38% about impact investing, 35% about engaging the next generation and 34% about integrating charitable goals into broader wealth planning.

Eighty-four percent of high-net-worth clients who discuss philanthropy with an advisor reported use of at least one giving vehicle, compared with 78% among those who do not engage in philanthropic discussions.

Strengthening Relationships and Driving Business Growth

Discussing philanthropy strengthens advisors' business, the survey showed, and serves as a powerful tool for deepening client engagement.

Ninety percent of advisors said philanthropic conversations benefit their practice, up from 78% in 2018. Eighty-eight percent reported that having philanthropic discussions deepens existing client relationships, up from 74% in 2018, and 92% said it helps establish new relationships, up from 60%.

TPI noted that advisors who discuss philanthropy with their clients are best positioned to meet evolving client expectations, differentiate their practices and build deeper, multigenerational relationships. At the same time, they grow their businesses and facilitate positive change in their communities and the greater world.