A U.S. Trust study found that people want their financial advisors to ask them about charitable giving. In fact, a third of clients surveyed think the topic of charitable giving should be raised in the very first meeting. Yet fewer than half feel their advisors are good at discussing personal or charitable goals with them.
Wondering how to start a conversation about charitable giving with your clients? Or looking to refresh your approach? As part of an ongoing series, we’re asking some of Central New York’s most experienced professional advisors how they “pop the question” about charitable giving to their clients.
Why do you think it is important to bring up the topic of charitable giving?
During the planning process, clients typically discuss only their family, yet, I find that charitable giving is often near and dear to their hearts. Philanthropy is a very personal issue, and I must first gain their trust before they will discuss topics such as this. The most important aspect of financial planning to me is that clients’ wishes are met. It is my responsibility to “get inside their heads” to ensure that our communication is complete. Clients, in general, are very receptive to discussing charitable giving, and often include it in their planning after determining what strategies, assets and timing make sense for them.
How do you learn about your clients’ charitable interests?
My first question to new clients is, “Please tell me why you’re here.” Charity is rarely first on the list, but sometimes during our initial conversation, it is a topic we discuss. It is usually through my review of responses to questions on my questionnaire, or through my examination of their income tax return, that I initially find out about their charitable intentions. I must establish rapport and gain a client’s trust before they will discuss personal issues such as family and charities. No one has the “perfect” family. Often, through our conversations, we will determine what relationship issues come into play. These can include topics such as health, maturity when it comes to spending and making wise financial decisions.
At what point(s) in your process do you bring up/revisit the topic of charitable giving?
During our initial consultation, and after reviewing the details regarding assets and income, I ask clients to tell me their goals. Whether charitable giving is there or not, I will raise the topic. Then, I listen.
What questions or ideas about charitable giving do you find resonate the most with your clients?
Clients rarely know what philanthropic strategies are available to them. Most of them have only written checks to charities, and don’t realize there are other and often better ways to give. They don’t give just for tax reasons, but it can be a motivator. Clients typically ask how to reduce estate or income tax. My recommendations may include strategies such as Roth conversions, sale of appreciated assets, or net unrealized appreciation of employer securities. I often suggest that they engage in charitable giving as a way to better reach their goals. Sometimes, it is not about increasing their giving, but simply timing it in a different manner. Using a donor-advised fund, making gifts of appreciated securities instead of cash, and creating a charitable remainder trust to enhance retirement income, are often strategies that I will explain. Clients are happy to learn new ways of doing things better, and it is one of the reasons that they come to me for financial planning.
How has your approach changed over the years?
I am more persistent and direct now, and I don’t apologize for asking probing questions. I tell clients that by knowing their answers regarding these issues, I can ensure that their planning better meets their needs. Clients come to me to educate them regarding what they don’t know, and to make sure they are looking at their planning in a comprehensive manner. It is not just about “running the numbers”. Sometimes they may feel guilty leaving assets to organizations instead of their family. I give them permission to include charities, or even suggest them in the event family members predecease them.
Is there anything else you want to add about helping your clients with their charitable planning?
It is our responsibility as professionals to delve into our clients’ minds when it comes to comprehensive planning. This includes philanthropy. Over the years, their wishes may change. Revisiting the topic at least every three to five years, or as their family situation changes due to circumstances such as births, deaths, health or finances is also important. They appreciate my reaching out to see if they want to discuss any revisions in their plan. Usually, the answer is “yes”.
