ELITE ADVISOR BEST PRACTICES
Grow Your Practice and Your Impact Through Charitable Counsel, Part Two
Helping clients and their extended families with charitable planning can yield substantial dividends for advisors.
By Michael King
- Charitable giving and planning creates a unique opportunity to build cohesion and a shared passion and purpose among family members, even over multiple generations.
- Advising clients in the area of charitable planning creates a unique opportunity for advisors to strengthen and deepen relationships with their clients.
- Charitable counsel can provide opportunities for advisors to provide other related services to clients, such as family business planning and family meeting facilitation.
As we mentioned in Part One, research shows that a substantial number of affluent clients are seeking advice about charitable giving—but advisors are often reluctant to provide it. That’s a huge opportunity cost for advisors, their clients and those in need. Here we’ll look at how charitable planning can strengthen family ties, often across generations, and how gaining expertise in charitable planning can further cement your relationship with clients and enhance the profitability of your practice.
Charitable planning can also create a unique opportunity to build cohesion and a shared passion and purpose among family members, even over multiple generations. It can serve as a mechanism to transfer family values and traditions to younger generations. For ultra-affluent families, charitable planning can be an important springboard to help younger generations find and embrace a life purpose beyond a traditional vocation. This can be very important for individuals who may not have a practical need or compulsion to work for a living because of the significant financial resources available to them. Arguably, these opportunities and benefits can provide a far more valuable inheritance than the transfer of financial assets most people think about when they think of intergenerational wealth transfer.
Finally, let’s consider the benefits available to advisors—not just their clients—who incorporate charitable planning into their practices. Advisors often experience a great sense of personal satisfaction when they see the positive impact their counsel has on the lives of the clients and families they serve, as well as on the organizations and individuals that ultimately benefit from their clients’ generosity.
Growing your practice and bottom line through charitable giving conversations
Through charitable giving counsel, advisors can also secure tremendous additional benefits to their practices. For example, engaging in charitable giving conversations provides advisors with a unique opportunity to strengthen and deepen the relationships they have with their clients. Such conversations and counsel enable advisors to explore issues close to their clients’ hearts and passions that may not otherwise arise in the course of their normal interactions. Such counsel can also lead to involvement with extended family members, providing a bridge of opportunity to develop relationships with their clients’ children and even grandchildren. At a time when the majority of affluent children do not stick with their parents’ financial advisors, these opportunities often strengthen client retention currently, and even over multiple generations.
Providing charitable counsel can create a value-added service to clients, setting advisors and their firms apart from the competition. With a reasonable amount of training, advisors can quickly position themselves as specialists in the charitable giving field. This in turn may lead to more business from clients who have a strong interest in charitable planning and who may specifically seek out such counsel. It may also lead to referrals from existing clients and other advisors who are aware that an advisor or firm provides such counsel—especially in light of the fact that so few advisors and firms do.
Because such counsel can secure significant tax benefits for clients, it provides an opportunity for advisors to position themselves in the eyes of their clients as a resource who can save them money and preserve their wealth, thereby offsetting the costs and fees of other financial services the clients receive and pay for.
Charitable counsel can also provide opportunities for advisors to offer additional services to clients, such as family business planning and family meeting facilitation. For example, consider advisors who counsel their business owner clients about the benefits of making annual charitable gifts of ownership interests in their businesses. Such advice can secure significant and immediate income tax benefits as well as increase a business owner’s cash flow through tax savings from their charitable deduction—and can provide unique and leveraged business succession opportunities. In this context, an advisor provides and/or facilitates tax, business succession and cash flow planning services. Furthermore, because in this case an illiquid asset is used for giving purposes, cash and other liquid assets may be preserved or even increased for investment management opportunities.
Hopefully, the myriad of benefits that clients and society receive from wise charitable counsel is a sufficient motivator to encourage, even compel, advisors to equip themselves in this valuable client service area. But even if their sole motivation comes exclusively from the benefits they themselves receive, those other benefits that are the natural byproducts create a win-win-win scenario for advisors, clients and society at large.