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How to Have A Conversation On Philanthropy With Your Clients As a Financial Advisor

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How to Have A Conversation On Philanthropy With Your Clients As a Financial Advisor

During Covid-19, one of the most challenging times in modern history, the crisis impacted the underprivileged the most.

In response to this, a positive change in individual and institutional philanthropy was sparked by the global pandemic as foundations, and individual donors came together to commit more capital and help those in need.

According to a Bank of America study of Philanthropy, even during the pandemic in 2020, nearly 90% of affluent households continue to give to charity.

Giving back has always been synonymous with the ethos at financial advisory Avestar Capital. As financial advisors who work with a wide range of clients globally.

“We aim to guide our clients’ charitable goals and intentions towards creating an impactful strategy that makes a difference,” says Xerxes Mullan, Global Advisor at Avestar Capital.

At Avestar Capital, it is seen that interest in philanthropy is rising among HNW individuals and families, and that has been matched by increased interest and commitment on the part of professional advisors in engaging their clients in discussions of philanthropy.

Shilpa Konduri, President at Avestar Capital and Xerxes Mullan, Founder, share creative ideas on how they talk with their clients about philanthropy.

1. Make philanthropy part of your initial information-gathering discussion with new clients. 

Advisors who successfully integrate charitable giving in their client conversations don’t necessarily stop and say, “Okay, now we’re going to talk about philanthropy.

”Rather, they incorporate the topic into an overall discussion of a client’s needs.

Some advisors suggest putting it on the agenda for the very first meeting with a client.

Others include it on the initial data collection form they ask clients to fill out, so it is one item on a list of topics assumed to be covered by any new client.

2. Talk about a legacy.

Particularly for trust and estate attorneys who are likely to be having conversations about an individual’s long-term plans, there is a real opportunity to learn more about a client’s vision of the world they would like to leave behind.

By opening up a conversation on legacy, an advisor can learn more about the client’s overall perspective on the world, including whether there might be interest in giving.

3. Ask open-ended questions.

When clients have been active philanthropically, advisors can learn more about it by opening up the conversation with comments like “Tell me more about that” or “What happened in that case?”.

Giving clients space to reflect on past giving in a way that doesn’t introduce pressure is useful to them and can also help you, as their advisor understand underlying motivations and passions.

4. Let the client step back from the finances.

In line with discussing a client’s legacy, one advisor that the team at Avestar Capital spoke with suggests opening the conversation by inviting a client to “Wave a magic wand” and talk about which societal issues they could address if they were able to do so.

Often, advisors learn that clients are already active in their communities through philanthropy or volunteering.

This can open up a conversation about how their vision of a better world fits into their wealth plans and help identify some areas where clients may want to do more.

5. Offer top-notch data.

Advisors emphasize the importance of tailoring the conversation as you get to know the client.

Talking about passion and the vision they want to see in the world is paramount for some clients. Others, though, may get excited by numbers and measuring impact.

Advisors we’ve spoken with suggesting that providing customized reporting and quality information about a client’s charitable giving can help them think about the impact they are having and lead to increased giving that is more effective and more satisfying.

6. Look at past tax returns to understand previous charitable giving.

Tax advisors, in particular, are already reviewing previous tax returns.

Some advisors suggest looking at the relevant schedules and framing questions about philanthropy, such as “Do you plan to continue this level and type of giving?”

. Rather than framing philanthropy as a new, intimidating task, this approach allows clients to see their giving as an evolution that simply builds on what they have previously done.

7.  Incorporate philanthropy into regular tax discussions.

For example, some tax advisors use quarterly tax estimates to reflect on all the available buckets, highlighting when it may be an opportune time to donate or open a donor-advised fund (DAF).

8. Set up a formula.

To assuage any concerns about not having enough money for the next generation, some advisors suggest setting up a formula to help clients see their true financial picture, something along the lines of “If we can guarantee that your children will receive X amount, would you be interested in some of the rest going to charity?” More often than not, the answer is yes.

Having these conversations with clients will make them think about philanthropy from a more holistic point of view and encourage them to involve themselves in giving back more.

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