How Well Do You Really Know Your Clients? The Disconnect Between the Financial Advisor and Client Regarding the Charitable Conversation

Financial advisors (and estate planners), do you know why your clients give away their money? What are their motivations? The 2018 US Trust Study of the Philanthropic Conversation found that advisors thought their clients wanted to give money away: 

1. To reduce their tax burden

2. For religious reasons

3. To create a family legacy 

However, when researchers asked clients that same question, clients had different answers (listed in order of most frequently cited): 

1. Because I am passionate about the cause

2. I have a strong desire to give back

3. I want to make a positive impact on the world

4. I want to encourage generosity in the next generation

5. I am religiously motivated

6. I feel it’s an obligation of being wealthy

Notably, only 16% of clients cited tax motivations as their main motivation for charitable giving. That’s not to say the tax deduction isn’t an important part of the planning conversation, but it may mean that your assumptions about your clients’ “why” is off. 

This research found further disconnects between the advisor and the client. When advisors were asked “what are your clients worried about as relates to their philanthropy? What may be holding them back from charitable giving?” Advisors said: 

1. My clients are worried they won’t have enough money for themselves and their heirs

2. My clients are worried they’re not wealthy enough to give money away

Yet when clients were asked the same question, they said they worried that: 

1. The nonprofit won’t use my money well

2. I don’t know enough about the charity or don’t have a connection to it

3. By giving now, I’ll be asked to give more by others, too

Those are very different worries to address! The takeaway: don’t make assumptions. Ask your client “is charitable planning a priority for you or something you’d like to discuss with us?” And then follow up with thoughtful questions like: “tell me a bit about why it’s important to you,” “what has been working so far?,” “what challenges have you faced?,” and/or “what’s holding you back?” You might be surprised by what you learn.