Many advisors are reluctant to broach the subject of charitable giving with clients. But starting those conversations may be easier then you think.
Taking the time to discuss with clients philanthropic goals as part of a financial plan will help build your relationships with them. “Most people want their financial advisor to be able to talk to them about the issues that are important to them, how to use their money well and how to be a good citizen,” says Marvi Ricker, vice-president of philanthropic services with BMO Harris Private Bank in Toronto.
Working with clients on their charitable goals as part of the planning process is becoming increasingly important. As the Financial Planning Standards Council reports, $1 trillion is expected to move between generations in the next 20 years. A large chunk of that wealth transfer may be directed toward charities.
These tips will help you to start conversations about charitable giving with your clients:
> Introduce the topic to new clients
Discuss your client’s feelings and habits regarding charity during the discovery process. Talking about philanthropy at this stage will let you know whether it’s something that should be included in the client’s financial plan.
Ask about the client’s involvement in community organizations and what issues are important to them, Ricker says.
“In other words, talking about what are the person’s values and interests outside of his immediate work and family,” she says.
And if the new client hadn’t yet considered charitable giving, bringing up the topic now will get them thinking about it.
> Discuss charitable giving with existing clients
Use a client’s success as a starting point to begin discussing charitable donations as a part of his or her financial plan.
Clients who have been successful in their businesses and investments often feel obligated to their communities, says Walter Fenlon a Kingston, Ont.-based advisor with Assante Wealth Management Ltd.
“If they’ve been very successful and made all their money in the community,” Fenlon says, “it can be very gratifying for them to help by giving to a charity of their choice.”
But don’t force the issue, Fenlon warns, if the client is not so inclined: “You have to know when to back off.”
> Include the family
Engage clients by including their families in discussions on philanthropic goals as a part of a financial strategy.
It’s a way for a client’s children to learn how to be good stewards of the family wealth as well as to understand how the money is to be distributed, Ricker says.
“It’s a wonderful way for the family to participate in a very positive activity.”
> Discuss the benefits
Explain to the client the personal and financial benefits of including charitable donations as part of a plan.
Frame the conversation with the lasting impact their donations will have in the community and the positive effect it can have on their tax bill, suggests Patti Vigna, coordinator of the Elite Case Team, Desjardins Financial Security in Toronto.
“People tend to say: ‘You mean there’s a way to do something for my charity and something for me and the only place that loses out is Revenue Canada? I’m in!'”
Next: What to consider when advising clients on charitable giving
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