I recently attended my grandson’s high school graduation. I don’t remember any of the speeches, but I was blown away by the number of students participating in the senior class project to support two local veteran’s organizations. During the ceremony, we saw a truly inspiring video about the project. The students raised money, stocked shelves, put in a greenhouse, created new sources of power and did many other hands-on things and got extremely involved. The experience had a significant impact on the students, as well as on the veterans and the veterans organization staff. It wasn’t just a bullet point for the students’ college applications. I’m sure many students, including my grandson, will continue to find ways to give back as they go along in life.
If you’re familiar with my column, you know I keep urging advisors to be more proactive about helping their clients with charitable giving, even if clients aren’t specifically asking them. Case in point: a recent survey of nearly 1,000 advisors conducted by the Society of Trust and Estate Practitioners found “increased curiosity and awareness about social responsibility” in connection with clients’ wealth and decision making.
Respondents said nearly half of their clients (42%) want to be more charitable and altruistic—even if they haven’t started taking steps yet. Further, the report said an additional one in four clients (25%) are taking steps to be socially responsible within their business operations and investments. Yet, when discussing long-term wealth or legacy plans with clients, the STEP report said only one in five advisors (20%) believed philanthropic giving fit into the “main discussion.”
Next Gen Interest
You should pay closer attention to this as your longstanding clients age out and hand over the family reins to NextGen. When STEP researchers asked advisors if they had noticed greater interest in social responsibility among clients over the past decade, they answered yes. If clients were under age 40, the report said they were twice as likely as clients aged 41 to 60 to show “significant” interest and seven times more likely than clients over age 60 to show significant interest in social responsibility.
It may be no coincidence that more and more colleges are making service learning a required (or strongly encouraged) part of the undergraduate curriculum. Participants include many highly selective schools such as Elon University, Duke University, Tulane University, Boston College, Northeastern University, Michigan State University and Brown University.
Business is Booming
I just spoke with a former community foundation executive who’s now working as an independent philanthropy advisor. He told me business is booming. He started his practice mostly advising charities about how to raise money. But now he’s working with financial advisory firms to meet with their clients and advise those clients about their plans for giving. The advisors know it’s important work and don’t feel they have the time or expertise to do it in-house.
Yet if you attend a major estate-planning or financial advisory conference, you’ll be hard pressed to find many sessions on charitable planning. It certainly won’t be the focus of any keynote speeches. However, the data shows that more and more clients are interested in philanthropy, not just the uber-wealthy.
Giving Strengthens Family Bonds
Planned giving not only makes sense from a tax and estate planning perspective, but it also helps preserve family harmony and togetherness. According to Fidelity Charitable Research:
81% of people who grew up with strong giving traditions in their family describe their core family as “very close”—10 percentage points higher than those who didn’t grow up with strong giving traditions.
33% of those who grew up with strong giving traditions describe their extended family as “very close,” twice the level of those who didn’t grow up with strong giving traditions.
Over my four-decade career, I’ve found that giving children a small amount of money to donate to a cause they select is great, no-risk training for later in life. It’s money they can’t spend on themselves. You can tell the child: “Look, I’m going to give you this amount of money. But you can’t spend it on yourself. Your job is to identify a cause you want to give to and explain to the family why you chose to give to that cause.” Now they have some skin in the game.
On the flip side, I once worked with a very influential Southern family. On top of having demanding careers, each parent was the president of the board of a prestigious local charity. They were highly committed to the causes, but their teenage kids had no idea why Mom and Dad were so involved with their respective organizations. They somewhat resented the amount of time their charitable work took up. The parents never bothered to explain to the kids: ”Here’s why we do this. Here’s why it’s important. Here’s what it means to us.”
Which family do you think will stay closer over the years? Which family’s children are more likely to pass along giving values to their children when they get older?
Cerulli research shows that more than 90% of affluent investors who use their own advisor didn’t consider their parents’ advisor in their selection process. With more young people leaning toward social responsibility, how do you like your odds?
As I mentioned, the Chartered Advisor in Philanthropy program is one place to start if you want to get up to speed on philanthropic giving. Also, consider attending Planned Giving Council meetings or other educational events. You owe it to yourself and your clients to get fluent in the language of giving, or find a fellow professional with whom you can team up (clients don’t mind). The ball is in your court, not your client’s.