NEW YORK--(BUSINESS WIRE)--
Professional advisors almost universally agree that philanthropy plays
an important role in their high net worth (HNW) clients' wealth
experience, and that engaging clients about their philanthropic
ambitions is good for their own business. However, a recent U.S. Trust
study reveals several disconnects between HNW individuals and advisors
centering on the initiation and substance of philanthropic
conversations. For instance, many advisors underestimate their clients'
desire to discuss their charitable goals and passions, and overestimate
the importance of tax benefits as a motivation for giving.
"Discussing philanthropy is an excellent way for advisors to learn what
matters most to their clients," said Claire Costello, national
philanthropic practice executive for U.S. Trust, Bank of America Private
Wealth Management. "The vast majority of wealthy individuals give to
charity1, and many cite charitable giving as one of the
greatest freedoms of wealth. Philanthropy today is no longer simply what
one does with ‘what's left,' but rather a pivotal consideration at the
front end of the wealth structuring process. For this reason, we are
seeing individuals and families rely increasingly on advisors to help
them integrate their philanthropic pursuits into their overarching
To better understand advisors' approaches to and HNW individuals'
expectations of these discussions, U.S. Trust partnered with The
Philanthropic Initiative (TPI) on a nationwide study, conducted in
August 2013, of more than 300 advisors - including wealth advisors,
trust and estate attorneys, accountants and other tax professionals -
and a random sample of 120 HNW individuals with $3 million or more in
investable assets who are actively engaged in charitable giving. Key
findings from the U.S.
Trust Study of the Philanthropic Conversationinclude:
Most advisors (89 percent) discuss philanthropy with at least some of
their clients, and 71 percent make it their regular practice to ask
clients about their interest in charitable giving. Meanwhile, only 55
percent of HNW individuals say they discuss philanthropy with a
One-third of advisors (33 percent) say they are the one to initiate
these discussions with their clients, and that clients initiate them
just 20 percent of the time. However, among HNW individuals who report
having discussed philanthropy with an advisor, half (51 percent) say
that they are typically the one to initiate the conversation, and that
their advisor brings up the subject on their own just 17 percent of
What matters more to HNW individuals than who initiates the
philanthropic conversation is that it be had in a meaningful way early
in the relationship. Advisors indicate that they are more likely to
bring up the subject of philanthropy once they have greater knowledge
of a client's personal (40 percent) or financial goals (47 percent),
or when they are aware that a client volunteers or is active in the
community (43 percent). However, one-third (34 percent) of HNW
individuals feel the topic should be raised during their very first
meeting, and virtually all (90 percent) agree that this discussion
should occur within the first several meetings with their advisor.
Among advisors who discuss philanthropy with their HNW clients, nearly
all (91 percent) encourage their clients to give to charity, with 41
percent of advisors doing so regardless of a client's asset level.
However, half (50 percent) of advisors prefer to wait until a client
has accumulated at least $500,000 in liquid assets before encouraging
charitable giving, and one-quarter (24 percent) place the starting
point at $3 million or more.
Wealthy seek values-based conversations about philanthropy
The study also found that less than half of HNW individuals (41 percent)
are fully satisfied with the philanthropic conversations they have with
their advisors. One reason may be that twice as many advisors (71
percent) say that they raise the philanthropic discussion from a
technical perspective - focusing on tax considerations or wealth
structuring, for example - compared to those who do so beginning with
their clients' philanthropic goals or passions (35 percent).
Once initiated, 41 percent of advisors say their further philanthropic
discussions also center on technical issues, compared to 38 percent who
tend to focus more on their clients' charitable goals. HNW individuals
report otherwise, with nearly two-thirds (63 percent) finding that
ensuing discussions with their advisor about charitable giving tend to
center on the more technical issues, while just 27 percent indicate that
these discussions center on their charitable goals, values and interests.
"While philanthropic conversations are taking place, unfortunately they
too often fall short of their potential value and impact," said Jim
Coutre, a partner with TPI. "While many HNW individuals rely on the
technical expertise of their advisors in this area, they are also
seeking conversations that are deeply meaningful on a personal level."
Despite these disconnects, many HNW individuals (73 percent) who discuss
philanthropy with an advisor still believe such conversations are
important, and the majority (82 percent) still feel that their advisor
plays an important, if not very important (33 percent), role in their
Misimpressions about why people give and why they don't
The top three reasons why advisors believe their HNW clients engage in
charitable giving are consistent with the top motivations reported by
HNW individuals themselves, which are: being passionate about a cause,
having a strong desire to give back, and having a positive impact on
society and the world. After that, however, reasons provided by HNW
individuals and advisors differ significantly:
The next three most cited reasons by HNW individuals were: to
encourage charitable giving by the next generation (30 percent),
religious or spiritual motivations (23 percent), and because they
believe giving back is an obligation of wealth (22 percent).
Meanwhile, advisors believed their clients' next most popular
motivations would include: reducing their tax burden (46 percent),
religious or spiritual reasons (41 percent), and creating a family
legacy (30 percent). The study found that, in fact, just 10 percent of
HNW individuals cite reducing taxes among their motivations for giving.
Further evidence of a disconnect on the topic of taxes was found when
advisors cited a belief that 40 percent of HNW individuals would
reduce their giving if the estate tax were eliminated, and that 78
percent would do so if income tax deductions for donations were
eliminated - whereas just 6 percent and 45 percent of HNW individuals,
respectively, indicated they would reduce their charitable giving if
these tax policy changes occurred.
The reasons advisors and HNW individuals cite for why HNW individuals
don't give or hesitate to give to charity differ even more starkly.
Advisors are under the misimpression that the top reasons HNW
individuals may shy away from giving are that they won't have enough
money to leave to their heirs (41 percent), they won't be left with
enough money for themselves (34 percent), and they don't consider
themselves wealthy enough to give (22 percent). On the contrary, HNW
individuals cite a concern that their gift won't be used wisely by a
nonprofit recipient (30 percent), their lack of knowledge about or
connection to a charity (24 percent), and fear of increased donation
requests from others (17 percent).
Utilization of giving vehicles
Leading philanthropic industry research has found that the majority of
wealthy donors (71 percent) give strategically, and have a plan for
their giving versus merely responding to requests for donations1.
This strategic focus has resulted in more HNW donors utilizing
structured giving vehicles - such as donor-advised funds, private/family
foundations and charitable trusts - to help achieve their philanthropic
Our study here found that the use of giving vehicles is correlated with
more advisor involvement. Among HNW individuals who discuss philanthropy
with an advisor, 47 percent use one or more structured giving vehicles
when making donations to charitable organizations - while such vehicles
are used by just 12 percent of individuals who don't discuss
philanthropy with an advisor.
Engaging the next generation
The study found that a mere 14 percent of advisors are likely to raise
the topic of philanthropy with clients (who have children) for the
purpose of helping to instill charitable values among the next
generation. Affirming this, just 9 percent of HNW individuals report
that their advisor has suggested involving children and grandchildren in
such discussions. Yet nearly half (45 percent) of HNW individuals feel
it is important to involve children and grandchildren in discussions
with their advisor about charitable giving.
Nearly one-third of HNW individuals (31 percent) indicate that they
would be more likely to choose an advisor who is knowledgeable about
charitable giving. More than half of advisors (57 percent) plan to
increase their knowledge about philanthropy and to better their ability
to advise clients about charitable giving. Among advisors interested in
becoming more proficient at rendering philanthropic advice, the areas
they would most like to learn about are:
Developing a strategic giving plan (55 percent).
Understanding more about giving vehicles (50 percent).
Integrating a client's philanthropic values and goals into an
overarching wealth management plan (46 percent).
Engaging the next generation in giving (45 percent).
The role that impact investing (or socially responsible investing)
plays in their clients' philanthropic pursuits (38 percent).
Good for clients, good for business
Three out of four advisors (74 percent) say that discussing philanthropy
with clients is good for their business for a variety of reasons,
including that it: presents a more comprehensive and holistic approach
to managing a client's wealth (24 percent); demonstrates greater
interest in their clients' charitable goals and aspirations (18
percent); shows clients that they are interested in more than just their
clients' money (13 percent); and provides insights that help advisors
better serve their clients (13 percent).
Many advisors (75 percent) find discussing philanthropy to be an
excellent way to deepen relationships and establish new relationships
(54 percent) by connecting with clients on something truly meaningful to
them. Many HNW individuals (40 percent) agree that discussing
philanthropy with an advisor has, in fact, deepened their relationship.
Please visit the U.S.
Trust Study of the Philanthropic Conversation for additional
Bank of America Study of High Net Worth Philanthropy
The U.S. Trust Study of the Philanthropic Conversation
was conducted in August 2013 by Phoenix Marketing International, an
independent market research firm, on behalf of U.S. Trust and TPI. Key
findings from this research are based on an online survey of a random
sample of 312 advisors - including wealth advisors, trust and estate
attorneys, accountants and other tax professionals - and a random sample
of 119 HNW individuals with $3 million or more in investable assets who
are actively engaged in charitable giving. All data was tested for
statistical significance at the 95 percent confidence level.
About U.S. Trust Institutional Investments and Philanthropic Solutions
Trust, Bank of America Private Wealth Management is dedicated to the
philanthropic and nonprofit communities. Through U.S. Trust
Institutional Investments and Philanthropic Solutions we put our
strengths and resources behind every mission - be it a nonprofit
organization or a philanthropic individual or family. We provide
specialized advisory, administrative and investment solutions to both
nonprofit organizations and private philanthropic clients that help
transform their charitable goals into meaningful action. We tailor
mission-focused solutions and offer ongoing advice and guidance through
a close working relationship with a dedicated advisor, helping
organizations and individuals turn missions into milestones.
About The Philanthropic Initiative
The Philanthropic Initiative
(TPI) is an innovative philanthropic consulting firm that helps
corporations, foundations and families develop and execute customized
strategies to increase the impact of their giving. Working nationally
and globally, TPI helps donors achieve philanthropy that is more
strategic, effective and fulfilling, and helps professional advisors
build the capacity to do the same with their own clients. Over the past
25 years, TPI has directed more than a billion in philanthropic dollars
and influenced billions more.
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Source: Bank of America