Conversation starters and year-end philanthropy tips for advisors to high-net-worth clients.

Advisors can help deepen their relationship with clients by proactively engaging them in a conversation about philanthropy. Over 95% of wealthy Americans are already donors to non-profit organizations. A 2013 US Trust survey found that financial experts do not broach philanthropic planning as quickly as their clients would like. In addition, when the topic of charitable giving does arise, advisers tend to dive into the technical aspects rather than focusing on their client’s philanthropic passions and goals, which turn out to be where most clients want to begin the conversation.

When attorneys, accountants, and wealth advisors recognize that a holistic approach will enable them to provide the best possible legal, investment, and tax advice, they provide better service and clients are grateful for the chance to share their thoughts. The first step is to find the right moment to broach the subject with clients. There are times when discussing charitable giving flows naturally as part of the larger wealth conversation such as,

During year-end planning…

• When your client has a good year

If your client receives a promotion, earns a generous bonus, or the client’s business throws off significant profits, he or she is likely to be in the frame of mind to consider sharing that good fortune with others. This is an excellent time to ask if there is a particular cause or charity that is important to the client and his or her family.

• When your client has highly appreciated securities

If your client has highly appreciated stock that has been held for more than one year, he or she can take advantage of the significant tax deduction, while avoiding the capital gains tax that would otherwise arise from the sale of the stock.

• When your client is preparing to sell their business

If your client owns appreciated (non-voting) shares in a company he or she is planning to sell, this is a time to discuss ways that a charitable gift can help reduce capital gains tax.

• When your client has an inheritance or unexpected windfall

If your client receives an inheritance, sells a valuable asset, or has some form of unanticipated income, this is a perfect time discuss opportunities for giving.

• When your client brings up the subject
  If your client opens the door by discussing a particular charitable vehicle, don’t hesitate to jump in and tackle the topic. This is an opportune time to have a broader conversation about philanthropy to understand his or her goals. This is where you, the trusted advisor, can offer valuable guidance on the best strategy to help him or her achieve their philanthropic goals.

 

CONVERSATION STARTERS

Introduce the subject in an open-ended way that generates a thoughtful response. Consider using one of the following conversation starters:

•  In order to create a comprehensive plan for you, I want to make sure we have considered all of the things you are trying to accomplish. Should we consider your charitable activities in the planning? Are you involved as a donor, volunteer, or board member in a charitable organization? If you are not engaged now, is this something you would like to do?

• A number of my clients are involved in their communities and support various charities as a way of sharing their good fortune with those who have been less fortunate. Would it be helpful for us to discuss ways we can make this happen for you, or whether you might like to increase your support for your charities?

•  You have experienced an appreciable increase in income this year. Would this be a good time to consider charitable giving, or bringing your philanthropy to the next level? I am happy to discuss strategies for increasing your philanthropy and off-setting the tax consequences of your success.

CHARTING CLIENT MOTIVATION AND VALUES

The US Trust survey also revealed that advisers and clients agree on the top three motivations for giving: passion for a cause, desire to give back, and interest in making a positive impact on the world. Understanding your client’s motivations for giving will help you take the conversation to the next level. Here are some questions that will help you gather important information about your client’s motivations for giving and history of giving:

• Why is giving important to you?
• What are you trying to accomplish with your giving?
• Who is involved with the decisions to give – spouse, children?
• Do you have charities that count on your support for year-to-year?
• What types of assets have you used when you have donated in the past? Cash, checks, appreciated stock, other non-cash assets?
• Are you concerned about realizing a significant tax-deduction this year, but need the flexibility to grant the money to charities over time?
• Do you have charitable vehicles in place, such as a charitable lead trust or a donor advised fund?

Values play an important role in shaping people’s views about their wealth and their giving. Addressing your clients’ values in the conversation about philanthropy can deepen both your understanding of the client and your relationship. JCF has excellent tools to share with advisors to facilitate values exploration and to aid you in having a productive conversation about philanthropy. Please check out the RESOURCES on the JCF website.

It’s natural for people to put off planning. As year-end approaches, there may be little time for your clients to decide how to maximize the social impact of  their success while minimizing the tax consequences, but JCF can help. A JCF donor-advised fund allows your clients to realize an immediate tax deduction, while providing them with time and flexibility to make grants to charities in a thoughtful and intentional manner.

Ellen Smith Israelson is JCF’s Vice President of Philanthropic Services. She oversees the development of educational resources for advisors and clients and is the liaison to the advisor community.