Article: Engaging Financial Advisors

Engaging Financial Advisors

Posted with permission from Philanthropy World Magazine

Includes article updates posted on August 12, 2004

$3 Trillion at Stake

Projections indicate that in the next 15 years there will be a $15.5 Trillion intergenerational wealth transfer in the US. If nothing changes, $10 Trillion will go to family inheritors, $2.2 Trillion will go to charities and about $3 Trillion to Uncle Sam. Much of what goes to Uncle Sam could go to charities . . . if financial advisors raised the giving question and got beyond simple "yes" or "no".

Source: adapted from Dr. Paul Schervish's research, "Millionaires In The Millennium" as interpreted by Drake Zimmerman, attorney, donor advisor, money manager, wealth coach and author of "The Bigger Pie"

What You Should Know About Awakening The Gatekeepers to Giving

Charles Maclean, founder and chief committed listener of Portland, Oregon-based PhilanthropyNow, recently spent six months sharing and learning best giving practices from Dallas to Honolulu, from Singapore to Sydney, from Atlanta to Auckland. During his journey, he gathered research and perspectives relating to the pending transfer of intergenerational wealth, estimated at $41 trillion US. In the following piece, the author presents practical findings and advice of interest to donors, fundraisers, and gatekeepers alike.

The Challenge and The Opportunity

Experts project that by the year 2040, an intergenerational wealth transfer of some $41 trillion USD will occur.* Of concern to the fundraising community is the fact that much of this wealth will never flow to nonprofits from the inheritors, until the "gatekeepers to giving" become comfortable raising the giving question with their clients.

According to a study by The Philanthropic Initiative, only 10 percent of affluent Americans age 45+ say they will leave anything to nonprofits in their wills.** And a recent Charles Schwab study revealed that only about 54 percent of the gatekeepers raise the giving option with all their high net worth clients. Many only raise it when asked first by the client.***

Who Are The Gatekeepers?

Financial planners, tax and estate planning attorneys, accountants, stockbrokers, bankers, and insurance agents are considered to be gatekeepers to giving.

What Do Gatekeepers Say Blocks Them?

1. Fear Of Losing Clients

Issues

Raising the giving question may alienate the client who doesn't want to give.
Inability to answer the client's technical giving questions.
Being perceived as getting "too personal."
Being seen as self-serving by offering services the client hasn't asked for.

Solutions

Immediately address the client's spoken problem or issue and establish responsiveness and integrity.
Then, go deeper to address broader opportunities for the client and community.
Realize that clients who are strongly disinclined to give will let the adviser know that very quickly.
The key to retaining the client either way is to be artful, use humor, help the client hear himself, and not steer the client toward any specific nonprofit.

Perspectives

Those clients, who are inclined to give, may well change advisers if that reluctant adviser doesn't raise the giving question. (Bryan Clontz, Financial Advisor, Atlanta)

Would you keep a gatekeeper who didn't advise you that you could give to your favorite charity and at the same time save tax dollars and make money in the process? (David Geller, CEO, GV Financial Services, Atlanta)

One reason children of current clients leave is that the adviser "just doesn't get it" on issues like philanthropy and socially responsible investing. (Tim Freundlich, Calvert Giving Fund, San Francisco)

2. Concern About Loss Of Commissions/Fees

Issues

How do I get paid for this charitable intent conversation?
Economic loss if the client moves monies from managed accounts to financial giving vehicles outside the gatekeeper's control.
Increasing gatekeeper competition from insurance agents, bankers, and accountants who can now legally offer advice and sell products previously restricted to other professionals.
The era of the "transaction based client" where the gatekeeper primarily processes paper is on the wane.

Solutions

Build into your first conversation with new clients an explanation of services and fees that includes wealth preservation, tax avoidance, growth, and giving.
Helping the client/donor sort out their giving passions and the right mix of giving time, talent, energy and dollars is a high-value service that should not be rushed and is billable.
Progressive community foundations and other donor-advised funds sponsors have developed ways that gatekeepers who assist their clients to move monies from the account they manage to that of the community foundation, remain involved in the asset management process.
Raising the giving question can be seen as a way of attracting new clients, retaining old clients, and receiving more referrals by offering new, deeper levels of service.
Foregoing a few basis points of commission or not billing for a few hours of client/donor coaching can be seen as part of the gatekeeper's own personal strategy for giving.

Perspectives

Savvy gatekeepers know that to survive and thrive, they must develop a deep loyalty relationship-based client vs. a transaction-based client. (Olen Earl, Gift Planning Officer, The Community Foundation For Greater Atlanta)

Inherent in being a responsible gatekeeper is choosing to put what's best for the client and their community ahead of one's own personal financial gain. That conscious action differentiates the seasoned, socially responsible gatekeeper from others. (Madeline Lee, Financial Advisor, Athenaeum Singapore)

3. Discomfort In Initiating The Technical Or Giving Passions/Values Conversation

Issues

Staying current with the ever-changing vehicles and tax rulings for giving such as CRTs, CLTs, CLATs, NIMCRUTs and SOs.
Few gatekeepers have been well trained to coach clients in human factor questions and go beyond document drafting, transaction processing, and financial instrument execution.
Addressing critical giving-related issues questions such as "helping resolve conflicts between spouses and kids on giving priorities and amounts" and "conducting due diligence on a nonprofit" sometimes puts gatekeepers outside their areas of expertise and comfort.

Solutions

Become trained and comfortable in the use of giving support tools that enable the donor/client to say "yes" or "no" to any giving request and feel good about themselves.
By assisting clients and their children to assist personal giving missions, the gatekeeper can help reduce intergenerational conflicts and/or client between spouses.
Encourage your professional organization to offer training, coaching, and mentors around giving tools/skills and best practices.

Perspectives

What distinguishes me from the rest and gives me the competitive edge is that I tell my clients, "You're the President in control of your financial life and I'm your Secretary of Defense helping you avoid big mistakes and become mere hassle-free and bring you options for you to consider in your own best interest.

Unwillingness to confront the client in order to help them get clear about their priorities means ... no real relationship of trust. (David Geller)

4. Not Giving Themselves

Issues

The gatekeeper may feel uncomfortable about asking the giving question of clients if the gatekeeper isn't yet giving.
Without a personal giving mission, both gatekeepers and their clients are like tumbleweeds blown across the highway by the last windy giving request.
Giving is a learned habit and art, and many people didn't have a strong positive role model.
Value differences between the client and the gatekeeper around community give-back

Solutions

One of the best predictors of habitual, joyful, high-impact giving is having a written giving mission. Until the gate keeper has taken the time to do a self-examination of his or her own passions, values and criteria for giving, it may be premature for them to be raising the giving question with their clients.
"Gatekeepers who give themselves and appropriately tell their giving stories to their clients (without pressuring them to give) will be seen as 'walking their talk" suggests Madeline Lee. "They become more trusted by their clients regardless of whether the client chooses to give or not."

5. Worry It May Be Unethical To Raise The Giving Question

Issue

In an increasingly litigious society, gatekeepers may be worried about the appearance of conflict or interest or acting outside their area of expertise.

Solutions

With regard to community foundations, the ethics question is answered when gatekeepers realize that community foundations are not the end-users of the client/donor's contribution, says Olen Earl. Instead, community foundations are in the business of helping donors support community needs that the donors care passionately about.
Assisting the client to conduct due-diligence on the nonprofit that the client may be considering giving to is a neutral, high-value, clarifying service that helps the client make better decisions for himself.
Professional associations representing gatekeepers might well consider setting ethical standards around raising the giving question, providing case studies and consultation to address concerns proactively.

Options For Gatekeepers Around Raising The Giving Question

1. Do nothing and avoid the question.

Too often, this results in a missed opportunity for the gatekeeper, the client who is a could-be-donor, and the community... and potential loss of the client who may go to another gatekeeper to get the giving counsel.

2. Develop a trusted referral network.

This can be either within the gatekeeper's firm or outside. The network makes it possible to send clients to those professionals just for the giving expertise. Choose professionals who are current on, adept at, and comfortable with the giving conversation and who agree to send the referred client back for other services.

3. Seek out a mentor or professional association training to grow essential skills and knowledge.

Being coached by that mentor and seeing the client along with a mentor can provide mutual learning experience. New giving support tools give gatekeepers proven starting point and process for success. Continuing education is essential.

In Conclusion

Says Bryan Clontz, "When you provide gatekeepers with training, experience, tools, confidence, and both psychic and financial rewards for raising the giving question, they will likely raise it."

One donor said it all: "It is through giving that we discover who we are and what matters to us." If indeed there is a human need to care and give, by raising the giving question with clients, the enlightened gatekeeper is respectfully fulfilling their fiduciary and community sustainability obligations.

"Gatekeepers who openly elicit and give wings to clients' giving wishes are acting in the best interests of the client, community, and humanity," urges Reed Rhorer, an estate planning and charitable giving attorney in Honolulu.

Olen Earl agrees. "If the gatekeepers don't raise the giving question who will?"

Dr Maclean may be contacted with comments and questions at advocate@philanthropynow.com, Portland Oregon, 503-297-1490, or visit www.philanthropynow.com.

*Projected by Paul Schervish, PhD, of Boston College www.sri.bu.edu
**Repeat study by The Philanthropic Initiative, Boston at www.tpl.org
***Charles Schwab study. August 22, 2003, at www.afpnct.org