In addition to helping clients realize their own dreams and reduce their taxes, talking about charitable giving can be a positive experience for financial advisors, too.

Talking about philanthropy can lead to deeper relationships with clients, says Jo-Anne Ryan, Toronto-based vice president, philanthropic advisory services with TD Waterhouse and executive director of the Private Giving Foundation.

Yesterday’s article listed five indicators that a client would be interested in talking about philanthropy. Ryan offers five triggers that can help you start a “giving” discussion, particularly with high-net worth clients:

1. The end of tax season
Now, that your clients have filed their taxes for 2011, says Ryan, now is a good time to talk about charitable goals for 2012 and their tax implications.

You could start the conversation by asking clients whether they received a refund or if they’re comfortable with the amount they pay in taxes, Ryan says. As most will say “no,” that’s a good segue into a conversation about philanthropy.

2. Appreciated securities
Clients looking to avoid capital gains taxes may be open to a discussion about making a donation to a favourite cause.

“If a client has appreciated publicly traded securities in [his or her] portfolio,” Ryan says, “that’s a great opportunity to chat with them about potentially donating.”

When a client donates shares in a publicly traded company, he or she will receive a tax receipt for the market value of the donation. There will be no capital gains tax, she says. Had the client sold the shares, he or she would have had to pay income taxes on 50% of any capital gain.

3. Securities held in a holding company
A high-net worth client who has appreciated publicly traded securities in a holding company, Ryan says, has a great opportunity to make a tax-efficient donation. If the client donates any of those shares to a recognized charity, the client will receive a tax receipt for the market value of those shares and pay no capital gains taxes.

The capital gain that he or she eliminated through the donation gets credited toward the corporation’s capital dividend account. The client then has access to an amount equivalent to the capital gain, free of taxes.

4. Stock options
Some of your clients may have stock options with their employers. If so, Ryan says, ask whether the client has a strategy for exercising those options. Often executives are not aware that they have 30 days to make a donation (within the same calendar year) to help reduce their taxes on the options. Those who plan to make a donation should inform their employers so the taxes won’t be paid immediately.

As well, it’s important to remind clients that the some rules have changed on stock options. Taxes are no longer deferred until the securities are sold. Taxes are now owed immediately upon exercise of stock options.

5. An RRSP is converting to a RRIF
Some of your older clients may be interested in making charitable donations from a registered retirement income fund (RRIF).

Some clients are resentful of the minimum withdrawals they are required to make from their RRIFs after they turn 71, Ryan says. These withdrawals may even trigger a clawback on their Old Age Security payments.

For those with significant assets in a registered plan who want to lower their taxes, Ryan says, you could suggest redirecting some of the RRIF income into a foundation or a donor-advised fund.

This is the second in a three-part series on discussing philanthropy with clients. Next: How to structure your charitable-giving conversation.