Advisors Are Second Only to a Spouse or Partner
as a Source for Philanthropic Information
Discussions between advisors and high net worth (HNW) clients
about philanthropy are on the rise, finds the U.S. Trust Study of
the Philanthropic Conversation, as clients report advisors to be a
valuable source of information, second only to their spouse or
partner. However, the study reveals several disconnects between
advisors and their clients. For instance, many advisors
underestimate their clients’ desire to discuss philanthropy early
in their advisory relationship and overestimate the importance of
tax benefits as a motivation for giving.
To better understand advisors’ approach to and HNW individuals’
expectations of these discussions, U.S. Trust, Bank of America
Private Wealth Management, partnered with The Philanthropic
Initiative (TPI) on a nationwide survey of more than 300 advisors –
including wealth advisors, trust and estate attorneys, accountants
and other tax professionals – and a random sample of more than 100
HNW individuals with $3 million or more in investable assets who
are actively engaged in charitable giving and who engage at least
one of these advisor types.
“Charitable giving is an important dimension of an individual’s
or family’s wealth experience, and the role of the advisor is
correspondingly so,” said Ann Limberg, head of philanthropic
solutions and family office at U.S. Trust. “Therefore, the better
advisors are at addressing their clients’ philanthropic needs, the
more likely they are to enhance their client relationships and grow
their business.”
Evident progress: aligning advisor practices and client
expectationsThe 2018 survey responses were compared to results
from the groups’ initial 2013 survey, and the study findings
demonstrate improvement in the philanthropic conversation between
advisors and clients, including:
- The vast majority of advisors (91
percent) believe that discussing philanthropy with their client is
important, and 53 percent perceive it to be very important.
- A higher proportion of advisors make it
their practice to ask their clients about philanthropy (80 percent
today versus 71 percent in 2013).
- The vast majority (94 percent) of
advisors discuss philanthropy with some of their clients, including
44 percent who discuss it with a majority of their clients.
- Advisors are taking a more balanced
approach to initiating philanthropic conversations with a mix of
technical topics (tax benefits, estate planning) and personal
topics (passions, goals) which align to clients’ reported
preferences.
- The majority (76 percent) of clients
who discuss philanthropy with their advisor rate their advisor’s
ability to discuss their personal values and charitable goals as
strong, up from 63 percent in 2013.
“Clients rely heavily on their advisors for guidance with their
giving. It is encouraging, therefore, to see more advisors
recognizing the importance of philanthropy to their clients and a
corresponding uptick in the number of philanthropic conversations
taking place between clients and their advisors,” said Claire
Costello, national philanthropic practice executive for U.S. Trust.
“Advisors who approach these conversations in a meaningful way –
focusing on personal goals and passions as well as the more
technical aspects of giving – are more likely to satisfy their
clients’ philanthropic needs while also growing their
business.”
Advisor misperceptions: client motivations and hesitations
about givingAdvisors correctly gauge HNW clients’ top
motivations for giving, namely: passion for a cause, impact on the
community, and a desire to give back. However, they misperceive the
importance of reducing taxes and enhancing the family name or
business as motivations. In light of recent changes, the study
explored the potential impact of the 2017 Tax Cuts and Jobs Act on
giving levels and found that advisors overestimate its impact: only
7 percent of donors plan to decrease their giving, compared to 16
percent of advisors who anticipate a reduction from clients.
With respect to clients’ hesitations about giving, advisors miss
the mark. Clients report barriers, such as lack of connection to
nonprofit organizations and fear of gifts not being used wisely,
while advisors perceive clients’ primary reasons for hesitating to
be centered on issues of wealth preservation, including not having
enough money for themselves or their heirs.
“The research results indicate that advisors’ understanding of
their clients’ philanthropic needs is increasing. However, advisor
misperceptions about clients’ motivations and barriers to giving
persist. This may result in missed opportunities – for clients who
may not be receiving the support they seek and for advisors who may
be less able to deepen and retain client relationships,” said Ellen
Remmer, a senior partner with TPI.
The value of advice: good for clients and businessThe
survey found that HNW individuals who consult their advisors about
their philanthropy are more structured in their giving.
Advisor-client discussions about philanthropy can enhance the
perceived value of the advisor. Two in five HNW individuals would
be more likely to select an advisor who is knowledgeable about
charitable giving, and 53 percent place more value on information
from advisors who are philanthropic themselves. In addition, 59
percent of clients report wanting their advisor to refer them to
another professional for complex philanthropic needs beyond their
advisor’s capabilities.
Seventy-eight percent of advisors are experiencing the impact of
philanthropic discussions with their clients on their bottom line.
More specifically, having philanthropic conversations has helped
advisors to:
- Establish new clients (60
percent).
- Deepen existing relationships (74
percent).
- Build relationships with clients’
extended family (63 percent).
Opportunities for advisors: refining when and what to discuss
with clientsWhile 54 percent of HNW individuals are somewhat
satisfied with the philanthropic discussions with their advisors,
only 45 percent are fully satisfied. The study identified several
opportunities to improve the conversation, including:
- Most advisors wait to raise the subject
of philanthropy until they have detailed knowledge about their
client’s financial picture (87 percent) or personal life (85
percent). However, the majority of clients expressed a desire to
have philanthropic conversations earlier – specifically 29 percent
at their first meeting and another 29 percent within the first few
meetings.
- While initial conversations are more
balanced than what the survey found in 2013, clients report that
ongoing philanthropic conversations tend to skew toward technical
(63 percent) versus personal (32 percent) topics.
- Advisor knowledge and use of structured
giving vehicles is increasing, but there is still room for growth.
Only a portion of advisors rate themselves as very familiar with
charitable trusts (53 percent), private foundations (38 percent)
and donor-advised funds (42 percent).
- Regarding nonprofit organizations,
there is a gap in advisors’ self-rated knowledge of nonprofits
versus client perceptions of their knowledge. Most advisors plan to
increase their knowledge of philanthropy, including becoming more
familiar with nonprofit organizations.
MethodologyThe U.S. Trust Study of the Philanthropic
Conversation was conducted in May 2018 by Phoenix Marketing
International, an independent market research firm, on behalf of
U.S. Trust and TPI. Key findings from this research are based on an
online survey of a random sample of 314 advisors – including wealth
advisors, trust and estate attorneys, accountants and other tax
professionals – and a random sample of 103 HNW individuals with $3
million or more in investable assets who are actively engaged in
charitable giving. All data was tested for statistical significance
at the 95 percent confidence level.
U.S. Trust’s Philanthropic SolutionsU.S. Trust recognizes the
importance of philanthropy to our clients. We are dedicated to the
notion of purposeful wealth and to the prosperity of the nonprofit
communities it supports. We put our strengths and resources behind
every mission — be it a philanthropic individual or family or a
nonprofit organization. We provide specialized advisory,
administrative and investment solutions to both private
philanthropic clients and nonprofit organizations that help
transform their charitable goals into meaningful action. We tailor
mission-focused solutions and offer ongoing advice and guidance
through a close working relationship with a dedicated advisor,
helping individuals and organizations turn missions into
milestones.
The Philanthropic InitiativeThe Philanthropic Initiative (TPI)
is a global philanthropic consulting practice that helps
individuals, families, foundations, and corporations develop and
execute customized strategies to increase the impact of their
giving and achieve philanthropy that is more strategic, effective,
and fulfilling. For nearly 30 years, TPI has served as consultant
and thought partner to ambitious donors and funders who embrace
innovative thinking in their efforts to find local, national, and
global levers of change. TPI is committed to actively promoting and
advancing strategic philanthropy by conducting cutting-edge
research, publishing donor education resources, and training
individuals, organizations, and advisors in best practices. In
addition, TPI helps professional advisors build their capacity to
meet the philanthropic needs of their clients by strengthening the
internal culture of philanthropy within firms, and providing tools
and resources to enable relationship managers and advisors to
better support their clients and attract new clients.
Bank of AmericaBank of America is one of the world’s leading
financial institutions, serving individual consumers, small and
middle-market businesses and large corporations with a full range
of banking, investing, asset management and other financial and
risk management products and services. The company provides
unmatched convenience in the United States, serving approximately
47 million consumer and small business relationships with
approximately 4,400 retail financial centers, approximately 16,100
ATMs, and award-winning digital banking with approximately 36
million active users, including 25 million mobile users. Bank of
America is a global leader in wealth management, corporate and
investment banking and trading across a broad range of asset
classes, serving corporations, governments, institutions and
individuals around the world. Bank of America offers
industry-leading support to approximately 3 million small business
owners through a suite of innovative, easy-to-use online products
and services. The company serves clients through operations across
the United States, its territories and more than 35 countries. Bank
of America Corporation stock (NYSE: BAC) is listed on the New York
Stock Exchange.
U.S. Trust operates through Bank of America, N.A., and other
subsidiaries of Bank of America Corporation. Bank of America, N.A.,
Member FDIC.
For more Bank of America news, including dividend announcements
and other important information, visit the Bank of America
newsroom. Click here to register for news email alerts.
www.bankofamerica.com
View source
version on businesswire.com: https://www.businesswire.com/news/home/20180719005093/en/
Reporters May Contact:Julia Ehrenfeld, Bank of America,
1.646.855.3267julia.ehrenfeld@bankofamerica.com
Bank of America (NYSE:BAC)
Historical Stock Chart
From Feb 2024 to Mar 2024
Bank of America (NYSE:BAC)
Historical Stock Chart
From Mar 2023 to Mar 2024