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You Can Help Make Your Clients’ Giving Smarter

June 3, 2015

Many high-net-worth individuals want to support charitable organizations. But their financial advisors often fail to start the conversation that can let those clients give more efficiently, Financial Advisor magazine writes. This presents an opportunity for FAs to facilitate their clients’ philanthropic endeavors — both to benefit clients and to grow their own businesses.

Advisors often don’t bring up charitable donations as part of their financial-planning discussions with customers, according to a 2013 U.S. Trust study cited by Financial Advisor. But clients want such help, the same source says, and aren’t even aware advisors can assist them. This suggests advisors are missing out on chances not only to bring in more money to manage or otherwise supervise but also to set themselves apart from competitors, says Financial Advisor.

To get going on that front, FAs can point to more tax-efficient ways to make charitable donations. This may include donating equities to avoid capital-gains taxes on securities held for more than a year or giving away a portion or all of a privately held stock to minimize taxes, according to Financial Advisor.

In turn, this sort of work can point the way to choosing effective vehicles for giving, the magazine says. Through such analysis, clients can make informed decisions about using donor-advised funds or establishing private foundations as alternatives to ad hoc check writing.

Advisors can help clients identify unwanted existing assets — such as artworks or real estate — that can be donated at fair market value, writes Financial Advisor. They can also help clients have greater social impact over longer periods by planning for charitable work in retirement and by involving heirs in philanthropy — ingredients, say experts, of preserving family wealth over time.

By Alex Padalka
  • To read the Financial Advisor article cited in this story, click here.