Have a deep and meaningful discussion with your clients
Financial advisers are told to engage their clients in deep and meaningful conversations about philanthropy, rather than just advising them on taxes and philanthropic vehicles, in a paper published by the CFA Institute.
Author of the paper, Jim Coutré says: “Having a meaningful conversation about charitable giving is an effective way of deepening client relationships and differentiating one’s firm.” He says that financial advisers have an important role to play in asking challenging questions and helping clients to think about their broader life goals, including philanthropic aspirations.
As a financial adviser, Coutré states that he has never come across a single inspiring philanthropist who has been solely motivated by tax. He says: “Thoughtful donors certainly maximise tax deductions . . . but they are driven to philanthropy for other reasons.”
However, he says that although most financial advisers talk to their clients about philanthropy, few go beyond discussing tax advantages. He advocates finding out about clients’ family and individual values. “As you learn more about your clients, you form deeper, richer relationships with them.”
Research from the National Center for Family Philanthropy shows that value-based philanthropy helps donors to achieve personal satisfaction, connect with like-minded people and transfer family values to the next generation.
Coutré acknowledges that some advisers feel awkward about addressing philanthropy but he suggests asking open-ended questions and presenting philanthropy as an option rather than an obligation. He also says that advisers have found it helpful to show clients how much they need to meet their future lifestyle requirements, as some worry that they do not have enough money. Another technique is to talk candidly about the legacy clients wish to leave and the impact they would like to have on the future.
Finally, the paper asks financial advisers to think about their own values and attitudes to giving so that they can connect with their clients. He suggests a set of questions such as: “When you think about the world and society today, what inspires and excites you? What upsets or angers you? What are some of the formative experiences or influences that have shaped who you are?”
By using these questions, Coutré argues that financial advisers will move their clients from “checkbook charity” to something much more rewarding.