When to Bring up Charitable Planning with Clients and What to Say
The 2018 US Trust Study of the Philanthropic Conversation found that the philanthropic conversation between the advisor and client should happen early and often but is falling short of its potential.
When you’re onboarding a new client, obviously, you have quite a long checklist of items to work through to ensure you are meeting their needs and setting up the right plan. You can’t possibly tackle everything at once. However, from the start, understanding your client’s charitable interests and needs absolutely should be on that list–after all, charitable giving is a component of their financial picture. The question is, how and when are you asking about this?
There are lots of great opportunities to bring up charitable planning with clients. Here are a few to consider:
When should you ask about charitable giving?
In your Client Intake Form
During one of your first meetings with the client
During any year-end planning meetings
When reviewing past tax returns
If the client is 72+ and required to take the RMD
If the client mentions charitable giving, a local charitable cause, or a charitable event
If the client has a major wealth event such as an inheritance or sells a business
If you’ve opened a DAF or family foundation for the client (or maybe they already had one prior to your engagement)
When should you say? How to bring up the charitable giving conversation?
In the first few conversations with a new client, here are some simple questions you might pose to introduce the charitable conversation:
“Is charitable giving something you’d like to discuss? What questions are top of mind for you?”
“Do you volunteer or donate to any organizations currently? Which of these relationships or opportunities do you most enjoy, and why?”
“How do you hope to use your wealth during your lifetime and possibly beyond?”
Big Picture Questions
Talking to your clients about charitable giving can be a really great way to get to know them better–and as a result, help you be a better planner. Maybe you start with some big picture questions like:
“In a perfect world, how would you like to be engaging charitably? Giving your money, time, talent…? How hands on do you want to be? How do you want to involve your family?”
“What values do you want to instill in your kids? What kind of legacy do you want to leave behind? How do you want to positively impact the world with some of the wealth you’ve created?”
“What causes, populations, or communities are you drawn to supporting and why?”
Taxes
If you happen to review a client’s taxes, you might say: “I see you’ve made some generous charitable gifts in the past. Are there any ways we can support you around charitable giving? Would you like to continue giving at this level and in this way?”
Inheritance
If a client receives an inheritance, you might say: “Have you decided how you would like to use the inheritance you just received? Perhaps you’d like to use some of these funds to make a charitable gift or gifts in honor of the deceased?”
DAF
If you’ve recently opened a donor-advised fund (DAF) for a client or are reviewing the DAF assets in their account over the years, you might say (as appropriate):
“Your DAF is doing great. The returns are growing, so it’s time to start making grants. Would you like some help with that process? Where have you given in the past? Would you like to give there again, or maybe explore new opportunities as well?”
“Choosing nonprofits to make grants can feel hard and overwhelming. Would it be helpful to connect you with a group that specializes in helping donors like you make a charitable plan and suggest nonprofits for you to support?”
Some advisors worry that if they bring up the charitable giving conversation, clients might ask them questions they don’t know the answers to. Consider your job to be asking questions, listening, and taking notes initially.
“I want to learn as much as I can about your charitable priorities/challenges/situation so I can be helpful to you.”
If you know the answer, give advice! If you’re not sure, you might say:
“I’m jotting down your questions so I can connect you with the right resources to help.”
“That’s a great question.” “I understand your challenge.” “I can see how you’re stuck there.”
“OK, let me look into this for you and come up with a few ideas for how to help you solve this. I know a number of great resources. I’ll circle back with ideas soon.”
The 2018 US Trust Study of the Philanthropic Conversation found that:
Clients expect to talk about philanthropy with their advisors but feel like they are usually the ones to bring up the charitable topic
Clients want to have a values-based conversation about philanthropy, not just focus on the technical details and tax planning
And, second only to a client’s spouse, you, the advisor, are the next most trusted partner
At the end of the day, it’s better for you to be in the driver’s seat of the charitable conversation–it shows that you are taking all of your client’s financial interests and needs into consideration and it allows you to have deeper, more meaningful conversations with your clients.
