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Interview with Claire Costello: The Philanthropic Conversation Survey Findings

Listen to the interview here

by Randy A. Fox & Claire Costello

Randy Fox: Hi, this is Randy Fox. Today I am privileged once again to be with Claire Costello who is a director of philanthropic services for US Trust company in New York. Our subject today is the current survey done by US Trust and the Philanthropic Initiative on the philanthropic conversation. This is a repeat of a survey that was done a few years back and an update and today we want to talk about the improvements and the disconnect. Claire, welcome. Thanks for being here, and I’m just going to kind of let you run with the subject, then throw in whatever I can throw in to throw you off your course.

Claire Costello: Good luck with that. Thanks, Randy. Happy to be with you as always. Good day to all of you listening in. I’m happy to once again be able to share with you the recent findings from our study. As Randy said, this study was undertaken in partnership with the Philanthropic Initiative out of Boston. It is indeed a refreshment of the Senate. It was first undertook in 2013, which really drills down and does a 360 analysis of the conversations that are being had, or in some cases not being had between traditional advisors and their high net worth consumers. Now, let me just give you one minute of methodology for those who are not familiar with the research.

Claire Costello: We pull a random selection of traditional advisors, which we defined to be accountants, the attorneys and wealth or financial advisors who have average books of business of clients with $3 million and above in investible assets. Then for a counterpoint view, we look to consumers of those services, so not necessarily the clients of those particular advisors, but a cohort of consumers of those types of traditional services that also fit that threshold of having $3 million or above in investible assets. We asked a series of questions that mirror each other to counterbalance to the varying perceptions as between advisors and their consumers or clients.

Claire Costello: What we first looked at is the overall importance of the philanthropic conversation between advisors and their clients. That is really the crux of this research. The findings that we found in 2018 again, an update to the original 2013 study, affirms that advisors are increasingly recognizing that these conversations are critically important to their clients, and to the advisor-client relationship. In particular, we learned that over half of advisors 53% say that it’s very important, and another 38% say that it’s somewhat important, totaling 91% to have this conversation. The percent that say it’s very important has risen considerably from 46 to 53% since we did the study in 2013.

Claire Costello: Over two thirds of the high net worth consumer share this view, that having a philanthropic conversation with your advisor is important. The biggest increase since 2013 is among those consumers saying that it is very important to do so. The majority of clients say that it’s very important, others say that it’s somewhat important, but overall, both between advisors and consumers the importance and the recognition of the importance of this conversation has gone up significantly. Now, because advisors see the philanthropic conversation being so important they make it their practice to engage with their clients about this charitable activity.

Claire Costello: 80% of advisers make it their practice or report, but they make their practice to ask their high net worth clients about philanthropy. This compares to 71% in 2013, so it’s gone up nine percentage points since we originally undertook the study. There are some varying degrees to which the type of advisor feels compelled to have this conversation. Leading the pack, our wealth advisors come in at 88%, who make it their regular practice. The attorneys indicates at the rate of 79% that they make it their practice, and 73% for tax accountants and advisors. I should interrupt myself and say that all of this information, the full report as well as an executive summaries are available to you on our website as is all our research, and that website is www.ustrust.com/philanthropy.

Claire Costello: Moving on. Not only are more advisors having a philanthropic conversation as we just saw, but more having it with more of their clients, which is again a multiplier effect in terms of the frequency, the centerpiece, the emphasis, if you will, on this conversation. 44% of advisors say they discuss philanthropy with most, if not all of their clients. Another 50% discussed with some of their clients and only 8% really report that they don’t discuss this with any of their clients. At the same time we see a corresponding increase in reported conversations from clients. 67% of clients report that they’ve discussed philanthropy with their advisors.

Claire Costello: This compares favorably to 55% back in 2013. So far advisors and consumers are really walking in step around this conversation in terms of its importance, its frequency and so forth. By the way, there’s one caveat there in that, advisors say they typically initiate the conversation 39% say always, or usually it’s them. However, clients all to report that they don’t care who initiates, but really if you drill down on it’s them the client. If you want to split hairs about who’s actually initiating the conversation, client say that it’s they that are doing so, advisors say that it’s they that are doing so, but at the end of the day, as long as the conversation is being had, your clients are pleased.

Claire Costello: When we look at, when they start the philanthropic conversation, this is always a finding that tends to make advisors feel a little bit shall we say, uncomfortable or surprised at a minimum. That clients want to have this discussion with their advisors very early in the relationship. Oftentimes we see advisors waiting until they have a more detailed knowledge of a client’s financial picture, or they have a detailed knowledge of a client’s personal life, or even what they’re volunteering or civic life look like. That’s not what your clients want you to do. Indeed, the vast majority of clients want you to have this conversation as a meaningful goals based, life goals, what’s the wealth for kind of conversation, values based conversation inside the first few meetings.

Claire Costello: In particular, 29% would like to discuss this at the very first meeting, so somewhere between 25 and 30% want this at the very first meeting. Another 29% want it within the first two meetings, and then in the aggregate over 95% want it heard inside the first three meetings. There’s no reason to wait. You can use those early meetings as listening sessions to better get to know your clients. I’ve often said, you may have heard me say before that, regardless of how expert you are at your particular trade, be it tax accounting, or wealth advising, or a legal counseling, unless you have this background information it’s prerequisite to knowing how then to perform your craft and your skill set within the circumstances that your client provides.

Claire Costello: If you do not have this background information, what’s the wealth for, what are their priorities and so on. You can’t properly perform your skills no matter how expert. Looking now at the content of the conversation. The content is very important, I should say, in terms of how successful the conversation ultimately is. We’ll see in a moment that clients really want a more personal values based approach. There is some progress in the way that advisors initiate the conversation, with increased focus on personal topics. That’s 40% in 2018, which is up from 35% in 2013. There’s a decrease focus on the technical topics, that’s 58% down from 71%.

Claire Costello: So, some significant growth with respect to how advisors tend to approach and initiate a conversation. The tendency is decreasing, causing initial conversations to become more balanced. Just to be clear on what we’re referring to, when I say personal topics that would include asking about passion, philanthropic goals, interest in charities, and donating generally. Or bringing up the topic of leaving a legacy, or discussing philanthropic activities of the advisor themselves. We’ll see in a minute how that can be very important.

Claire Costello: The more technical topics are obvious, explaining tax benefits of donating, making the conversation part of the total financial planning or estate planning conversation, reviewing levels of current or past giving, mostly numerical discussions, more technical. Those are the ones that clients are looking to steer away from. With respect to the ongoing conversation versus the initiating conversation we see the advisors also report having shifted their approach to the ongoing conversation since 2013. There’s been a slight increase in the discussion of personal topics in that context as well on a slight decrease in the use of technical topics.

Claire Costello: However, high network consumers say the ongoing conversation is still too technical. This is where the real significant disconnect still exists and persists across the initial study until the current version. We see that 63% of consumers report that the conversation are mostly focused on technical topics, and just 32% report focus on personal topics. That’s still a significant divide. It still does not jive with the perception of the advisors. Even if you think you’re leaning toward the personal, I would advise that you lean a little bit more because they’re still coming out more on the technical side. Only 6% of consumers report a balanced approach to the conversation.

Claire Costello: Incidentally, as I mentioned a moment ago, or foreshadowed 47% of advisors who also incorporate into the philanthropic conversation some discussion of their own philanthropy clients respond very favorably to that. They report it to be helpful and desirable to the overall conversation. Again, if you’ve got any personal civic engagements or personal experience, be them successes or failures, all of that, is information that consumers are looking to hear from you. The other component that took a bit of an uptake is the advisor’s recognizing the importance of the next generation in the philanthropic conversation.

Claire Costello: Advisors believe increasingly that discussing philanthropy helps build relationships with clients into the extended family. The majority of advisors therefore raised the subject with multi-generational family clients. We said that advisors recognition of this has increased to 63% which is up from 56% in the earlier survey and 71% also consider discussing philanthropy as an important part of building relationships with the extended family. 66% present the subject of philanthropy with clients who they know to have children or grand children as a way to instill charitable values in the next generation. Raising family and family culture is another way to approach this conversation from the software and less technical side.

Claire Costello: When we look at overall satisfaction of clients with how well you are having this conversation we can see that customer satisfaction has increased since 2013. However, 45% of high net worth individuals are still not fully satisfied with the conversations you’re having with them on this subject.

Randy Fox: Excuse me Claire. You think in part B because, again were too technical and not enough on the more personal side?

Claire Costello: I think that’s exactly right. I think that’s where we see the biggest disconnect. I might interject here too, that we have just released our sister organization, Merrill Lynch, has just released a study this past week that they conducted in conjunction with Age Wave and it was focused primarily on retirement and exploring issues of legacy. I recommended to you, it’s also available online. One of the things that they uncovered in that survey was that values and life lessons are the most important part of one’s legacy.

Claire Costello: They talk about respondents to that survey, recognizing that the importance of having financial assets and real estate and special wishes to their families, that among all of those, they unequivocally identified values and life lessons as the most important part of their legacy. As you do what you do when you structure the wealth and pass the wealth and so on as you do bear that in mind that people really want to be remembered for more than their money, and 94% I should say, of the survey respondents in that Merrill Lynch, Age Wave survey, say, “The definition of a life well lived is having family and friends that love me.”

Claire Costello: The second priority was having made a positive impact on society. In contrast only 10% say a life well lived is defined by accumulating a lot of wealth. I think those are loud lessons for all of us to take away, and really apply as you think about how you frame the conversation, how you approach the conversation. That’s really what defines a legacy to most high net worth individuals.

Randy Fox: Interestingly though, in this survey it seemed like there was very little interest on the part of the consumers in bringing the next generation into their philanthropy, or that it was being overstated by advisors. Am I mistaken?

Claire Costello: I don’t know that this study is the best barometer for that. I think more insights into that can be gleaned from yet another researcher who’s done a project we’ve done, is our study of high net worth philanthropy that we do on a biennial basis. In that we see what the role is of intergenerational philanthropy, and the interaction between seniors and rising generations. We also, in a previous iteration, looked at what the impediments are. Is it too inconvenient? The geographic disbursement. Is it that you perceive your interest to be two divergent? All of those is an issue of control. In most cases it’s that they just don’t know how to begin.

Claire Costello: They just don’t know how to have those intergenerational conversations around legacy and philanthropy, and how they can best approach that topic, and that’s yet another area in which advisors can be particularly helpful.

Randy Fox: That’s very true. In fact, we see a lot more advisors taking that role in the world I live in any way, of starting to bridge the gap and the family and help the family open the conversations with the younger generation.

Claire Costello: Yes. So much of what we see in the realm of philanthropy is because people don’t know how. We know that the number one challenge for high net worth donors is deciding what they care about, and what to do about what they care about. Second, is understanding what nonprofits are out there to help carry forward their mission, once defined. They’re very fundamental first step, just identifying your philanthropic issue areas. Again, one of the main reasons why there’s not more intergenerational philanthropies is because no one asked anybody to join the fold.

Claire Costello: Some of them are just, when you look even in the realm of fundraising, “Why are you on the board, or why are you giving a gift to any particular …” “Because somebody asked me.” So much of this is just fundamentally opening the conversation and watching and listening closely for what follows.

Randy Fox: Well, that’s great news for us because we should be observers of our clients, and really start to question them deeply about why they’re doing what they’re doing and how we can help them improve what they’re doing.

Claire Costello: Absolutely. And, as we’ll see in a moment, they are relying on advisors to do just that more heavily than ever before.

Randy Fox: I’m sorry for all the interruptions.

Claire Costello: Not at all.

Randy Fox: Not that it was important.

Claire Costello: It’s part of the discussion, so thank you. Moving on to looking at now client’s perception of how other advisor’s ability to even have this conversation. The great news is that you’re getting good reviews out there. High Network consumers who have discussed philanthropy haven’t even more favorable view of their advisor’s ability to hold that conversation. Other perceptions to discuss personal values and charitable goals has risen significantly among those who report discussing philanthropy with their advisors. 76% rates their advisor’s ability as strong, which is up from 63% in 2013. Congratulations to all. You’re going in the right direction.

Claire Costello: We’re now going to look at a potential area for further disconnect. We saw it first in terms of the content of the conversation that are being had. We’re now going to look at what advisors understanding is or client’s motivation for philanthropy at all. We see that they correctly state the top three reasons cited by consumers. Advisors and consumers are in sync on these top three, which are, passion, impact, a desire to give back. Those are the top three sited by the consumers in this research. Advisors however overemphasized taxes, legacy, and enhancing the family name. That particular overemphasis on taxes I think informs that disconnect that we saw earlier in the context of the content of the conversation.

Claire Costello: Incorrectly, advisors assume or rank the importance level of tax implications of giving at 46%, when consumers rank it as 16%. That’s a significant divide that errs on the side of the technical. Similarly, there is a divide around whether or not to creating a legacy is important. Advisors put that in a 29%, consumers rank that at 12%. Finally, the degree to which philanthropy either enhances the family or the business reputation advisors put that in at 20% in terms of weighting of a motivation for donors. Donors put it at 6%. There’s a whole wrap there, and we’ll see it in the full study of where advisors get it right, but these are the three most significant areas where advisors get it wrong.

Claire Costello: It’s not a reputation issue. It’s not … Go ahead.

Randy Fox: I’m sorry Claire. The thing that kind of unsettles a little bit, is we just had this long talk about legacy, and advisors tend to think it’s more important than the consumers do, which seems opposite of what the study says. I’m a little confused by that.

Claire Costello: I see your point. I think the question is that they want to talk about legacy. I think legacy is a very subjective term. I think the point is, the other study says that, when you conceive of legacy it’s not a monetary conception. It’s the value [inaudible 00:19:59]. Which is different from saying, how much of legacy drives their giving. It just says, “You’re going to talk to me about legacy. These are the contours of legacy to the high net worth minds.” It’s about values, it’s about memories, it’s about loving relationships, but that doesn’t necessarily mean that that’s the driving force behind their giving.

Randy Fox: Good point, thank you. Good clarification, actually.

Claire Costello: On top of that is the huge spike in those age 55 and above and giving while living. Partly due to longevity of life these days, partly due to the complex and hairy nature of the social problems that are staring us down, but people are motivated to get busy now. We see volunteerism rates have gone up, and so forth as baby boomers perhaps retire out of their jobs, but remain vital in their communities. There’s a lot of activity that happens in life, now more philanthropically than in the past, which also may take the siphon a bit off of the notion of philanthropy informing legacy if their philanthropy is happening in real time, and not necessarily at end of life.

Randy Fox: Yes, that makes sense.

Claire Costello: It’s always helpful when you make sense, Randy. Similarly, we looked at a moment ago advising perceptions of what motivates high net worth consumers to give. We looked at the flip side, which is advisors understanding client’s hesitation around philanthropy. Once again, here we see some disconnects. Advisors are less perceptive here when it comes to their clients hesitations about giving. They incorrectly believe that their high net worth clients are hesitant to give because of wealth preservation, rather than due to knowledge or relationships. Advisors site not enough money for themselves, not enough money for their heirs, or certainly that they don’t consider themselves, the clients themselves to be wealthy enough.

Claire Costello: That could not be farther from the truth. Instead, consumers say their top reasons for hesitating to give include lack of knowledge or connection to a charity, concerned that the gift won’t be used wisely. Thirdly, a fear of an increase in donation requests. There is a complete disconnect when it comes to what might cause a donor to be hesitant. When you’re having that conversation initially, if you’re not getting a bite, if you’re not clicking with … It may not be that they’re hesitant to give. It may be that you’re approaching the conversation from a wealth preservation standpoint. Again, slightly more technical than the more altruistic, what do you care about and what organizations can help you carry that mission forward.

Claire Costello: Turning now to look at the role of the advisor. Advisors perceive it to be their responsibility to have a philanthropic conversation. 78% feel that it’s their responsibility to raise the issue of charitable giving, parenthesis, consumers don’t think they do it all the time. Advisors think they do. 62% of advisors consider it to be further and ethical and professional obligation, so responsibility as well as ethical and professional obligations to raise this conversation. When we look at the importance of advisors, as I mentioned a moment ago, the importance of an advisor as a source of philanthropic advice, you should be pleased to know that second, only to a spouse or partner advisors are considered the most valuable source of charitable giving advice by high net worth consumers.

Claire Costello: That’s a pretty powerful statement. The consumers’ assessment of your role in supporting their philanthropy is very high, and their regard for you is in accordance with that. Again, second only to their spouse. Importantly, advisors were ranked higher than other family members. You are all rank higher than family members, friends, religious advisors, giving circle members, etcetera. It’s clear that advisors play a critical role in the minds of high net worth consumers in client.

Randy Fox: That’s really Important.

Claire Costello: Yeah, it sure is. That’s a lot of responsibility, and it also means that there’s a lot of knowledge or networking that you need to build for yourselves in order to be able to meet that expectation.

Randy Fox: It also should put a lot of pressure on the advisor community to get better at this. Even though we’re well regarded giving out the right information and giving it well is going to be more and more important if we want to keep that place.

Claire Costello: Exactly. We’re going to see in a minute that advisors recognize that they need to get up to speed on some issues, and what they’re doing to better do that. We’ll look at that in one moment. We wanted to look at the advisor’s role with respect clients use of giving vehicles, and we see a pretty strong correlation. First off, the use of giving vehicles generally by high net worth donors has increased since 2013 from 32% up to 43%. People are getting more organized around their giving, for a whole host of reasons that you’re well familiar with.

Claire Costello: This increase is greater among donors who discussed philanthropy with their advisors. Let me say that again. There was a direct correlation between the use of giving vehicles with those who received counsel from you all and those who do not. In particular, when you look at all high net worth consumers who use structured giving vehicles that’s about 43%, as I said, up 32% in 2013. When we look at high network consumers who discuss philanthropy with their advisors who use a structured vehicle that 53%, 10 points higher than the 43% for the full cohort.

Randy Fox: And all we really have to do is look at the growth of donor advised funds to say, “That makes sense.”

Claire Costello: Exactly. There is a breakdown in the detailed report about which vehicles are being used and so forth. When we look at transferring wealth and philanthropy there is a bit of a startling statistic here that jumps out at me. First one we said, more high network consumers are including philanthropy in their wealth transfer plan, where consumers report a major increase in testamentary giving through their wills and wealth transfer plans up from 36% in 2013 to 55% in 2018. This practice is even more prevalent among those high net worth consumers who discussed philanthropy with an advisor, it jumped from 55% for the general cohort to 66% for those who talked to you all about their philanthropy.

Claire Costello: Again, huge correlative influence of those who get advice from you and those who don’t in terms of, who includes philanthropy and their transfer plans. However, and here’s the statistic that I alluded to. A significant number of professional advisors don’t know whether their clients have made charitable plans at all. 27% overall and 36% of wealth advisors in particular say they don’t know if their clients testamentary or estate plans included charitable provision or other plans for philanthropy. I find that to be startling, so let me just say it again.

Claire Costello: Despite the fact that there’s a significant uptake in the inclusion in testamentary planning and wealth transfer planning by high net worth donor consumers in their wealth transfer plans, there’s a remarkable lack of knowledge on the part of the advisors as to whether or not those provisions even exist. Nearly a third of you don’t know, don’t ask. I don’t know whether or not-

Randy Fox: We aren’t actually taking their wills and trusts and reading them, which as an advisor I think that’s something we ought to be doing, depending on our professions, but certainly attorneys and wealth advisors, if you’re a financial planner you need to know what your client’s documents say. It would make sense that you would know that they were dispositive provisions in their documents.

Claire Costello: Exactly. Even short of pouring through the documents. I would think that a simple conversation, one that we talked about early on that’s focused on values, and that focused on priorities for the wealth might elicit the comment or the revelation that I’m saving my philanthropy for end of life, that I consider that to be a priority. That’s a simple conversation. You don’t even look at the documents to discern that. That’s something that you ought to be putting into your questioning conversational repertoire if it’s not already in there.

Claire Costello: When we look at advisors referrals to other professionals, this we’re starting to get into when advisors feel perhaps out of their depth with their knowledge and in fielding the issues or questions and concerns that their clients might bring to them around their philanthropy. As much as they respect and they believe that their advisors are doing able job, there are certain circumstances where the consumer’s questions and needs exceed the advisors knowledge. Most clients in those circumstances want a referral to another professional if their advisor can’t fully address their philanthropic needs.

Claire Costello: As clients increasingly become more sophisticated advisors will really need to keep up, and they’ll need to increase their knowledge and experience accordingly, expand your referral networks and so forth. The data looks like this. We see that 16%, which is up from 8% in 2013 of high net worth clients say they haven’t had a need for philanthropic advice that exceeds their advisors capabilities. The good news is that clients don’t hold it against the advisor for not having the quote unquote answer, or requisite knowledge. As long as the advisor displays first and foremost the sensibility to even have the philanthropic conversation, and secondly that the advisor was able to refer that client to another professional who could assist.

Claire Costello: Clients do want to be referred out to those who have the knowledge, and 59% of high net worth donors say that they would want to be referred to another advisor if the needs exceed the knowledge of their current advisor. Again, it doesn’t mean you have to know everything, but you have to know who does. Building your community networks with your community foundations, with the nonprofit staff, with in-house plan giving at nonprofit organizations and so on and so forth with US Trust Philanthropic Advisory division to put a plug in there are many, many, many resources. The philanthropic marketplace is chockablock full with infrastructure these days.

Claire Costello: Finding those resources, building that network, attending lectures, doing … There are so many certifications available now. There’s CAP, there’s AiP association. There are so many opportunities to learn and get smarter about this information, so no excuse for not keeping up.

Randy Fox: The good news is, you don’t have to know everything, but you have to know someone who does.

Claire Costello: That’s right.

Randy Fox: It’s a lot easier to build a network sometimes, than it is to find time to educate yourself on all of the various planned giving vehicles that are out there are all of the things you need to know about giving, but it’s certainly not that hard to find resources.

Claire Costello: Exactly. We just looked at the instances of the degree to which clients perceive that their needs or their questions exceed the expertise of their advisor. We asked the same question to advisors, and we found that half of all advisors report that their clients need for philanthropic advice exceed their own knowledge. Again, if advisors feel as though some of this is beyond the areas of expertise, they’re not alone. and there’s no shame in that of course. The point of this is that it’s no excuse to shy away from the conversation, because you will get dinged, for lack of a better word, far more for not having the conversation than you will ever get dinged for having it and fielding a question beyond your knowledge base.

Claire Costello: One should not shy away, or use that as an excuse that you’re not expert enough, you’re not knowledgeable enough to have the conversation, because that will surely put you at disfavor with the client. The fact that you may not have all the answers is not necessarily to your detriment. 83% of advisors say that they would refer to other professionals if a client need exceeds their knowledge, so that’s great. Important, as we said, to build a network for those circumstances. Here’s what you were mentioning, Randy, with regard to advisors philanthropic education.

Claire Costello: As noted earlier, advisors are increasingly recognizing the importance of philanthropy to their clients and further consider it to be their ethical and professional obligation to discuss philanthropy with their clients. Advisors are therefore increasing their knowledge of philanthropy as evidenced by the increased offerings in both elective and required continuing ed courses, the existence of organizations, as I mentioned like AIP and other associations and categories and so forth. Advisors also know that clients philanthropic knowledge is increasing alongside their own and they’re eager to satisfy client expectations.

Claire Costello: We know that 63% of advisors, which is up from 57% in 2013, plan to increase their philanthropic knowledge. 57% have taken professional courses to build their knowledge of philanthropy. Good on you all for getting out there and building your knowledge base. We looked at some specific learning priorities for advisors and they rank in first order understanding more about giving vehicles, which came in at 63%. Developing strategic plans and mission formation, which was 57%. Integrating values and goals into the overarching wealth management plan and so forth.

Claire Costello: You can see a further breakdown by advisor type in the full study, but some of the main priorities were more, the number … The more about giving vehicles, more about plans information also in there was 38% wanted to know more about impact investing, 40% wanted to become more familiar with the nonprofits in their community. One additional note here is that particularly as it relates to knowledge of local, national and international nonprofit advisors rate themselves as significantly more knowledgeable than clients do on that particular note. There is space there for advisors to grow in their knowledge around nonprofit and mapping of different sectors.

Claire Costello: When we look at high net worth consumers who too want to keep learning about philanthropy we see that 66% of consumers are also interested in learning about at least one topic, and their areas are prioritized to include, again, in sync with advisors. Number one is, giving vehicles. Number two is, becoming more familiar with nonprofit organizations and community social needs. Third is, integrating their values and charitable goals into overarching wealth management plan. There is some synchronicity there between advisors and their clients in terms of what they’re learning desires are.

Claire Costello: Now where the rubber hits the road for you all is, what’s this all for? What are the benefits of going through this with your clients, of going through the listening, of approaching things from the softer perhaps more uncomfortable side for you? What is the benefit of undertaking all this learning and keeping pace with your clients around philanthropy? The answer is that, there are definite benefits that are tangible that will accrue to your bottom line. Most advisors believe that discussing philanthropy is good for business development, and more advisors are reporting this than we’re reporting it in 2013.

Claire Costello: This year’s number is at 78%, recognize that this is good for business. In particular, advisors see that discussing philanthropy provides a more comprehensive and holistic advisor approach to their client work, that it leads to better insights and helps serve clients fully, that it shows their personal interest in their clients and their lives, and that is good for their image, that it shows they as advisors are not just about money and there are many other ways in which advisors articulate the benefits for their practice.

Claire Costello: Then, with respect to business, we see that having a philanthropic conversation enables advisors to establish new client relationships, deepen existing client relationships, and as mentioned earlier, extend their reach within a client family to subsequent generations. 60% of advisors agree that the discussion of philanthropy is a means of establishing new clients. 74% agreed that the discussion of philanthropy as a means of deepening relationships, and 63% of advisors agree that the discussion of philanthropy helps build extended family relationships.

Claire Costello: Those are certainly clear majority of folks who have experienced tangible impact to their bottom line of business. Advisors who are philanthropic themselves are more valued by network consumers. This is manifest in several different ways by advisor’s knowledge of philanthropy, informed high net worth advisor selection by high net worth consumers. That is to say, you’re more apt to get a referral, and many advisors report additional, opportunities resulting from discussing philanthropy with clients. Let me break that down for you. 47% of advisors do discuss their own philanthropy with their clients, and those that do see that as a favorable response, or receive a favorable response.

Claire Costello: 40% high net worth consumers would be more likely to select an advisor who’s knowledgeable about philanthropy. 33% of advisors have been asked to serve in some capacity related to their clients giving, serving on a board, becoming a trustee, outside consultant and so forth. This is an example of how discussing philosophy could deepen relationships. Many benefits that flow from having this conversation. In some ways we know that the vast majority of high net worth individuals give to charity and many consider philanthropy to be an important aspect of their wealth experience.

Claire Costello: High net worth individuals are increasingly relying on you to support them in their charitable activities. Nearly all advisors consider discussing philanthropy with their clients as important, and have become more adept at initiating and conducting the conversation. However, philanthropic conversation with advice provided from advisors are not always aligned with the client’s needs. Again, erring on the technical side. Clients would prefer the conversation to happen earlier in the advisor relationship and for it to strike a better balance between the technical and the personal.

Claire Costello: Finally, these conversations help advisors develop a deepened client relationships and grow their books of business by connecting with clients in a more meaningful way. Randy, that is the sum total of the research.

Randy Fox: It sounds like as advisors the best thing we can do is always discussed philanthropy, discuss it early and often, get better at it. Don’t be afraid to talk about the value side of things, and don’t be afraid to talk about your own involvement in your own philanthropy. And it’s good for everybody. It’s good for you and it’s good for the clients and it’s therefore good for the country.

Claire Costello: Right. [inaudible 00:40:27] win. It’s good for the advisor, and it’s good for society because ultimately you are, I should say, potentially moving resources into the public good that would otherwise not have happened had you not simply had the conversation.

Randy Fox: Well, I think we’ve agreed about this for a long time and it looks like more and more people are starting to just come around our way, Claire.

Claire Costello: [inaudible 00:40:53].

Randy Fox: That must be it. I’d like to thank you for your time today. It’s insightful as always, and I look forward to our next conversation.

Claire Costello: My pleasure. Thank you, Randy.

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