Case Studies and Articles

Why financial advisors fail to ask clients about charitable planning – Henry & Associates

Why financial advisors fail to ask clients about charitable planning:


1. it’s not a priority


2. they’reafraid of offending their clients and losing the business


3. they’renot that charitably inclined themselves and can’t envision clients giving away anything that shortchanges the kids or uses up resources that might be needed later


4. planned giving is sort of complex and has a lot of tax code issues to work through, why bother to learn about such an obscure field when so few people do it?


5. they assume their clients aren’t charitable


6. they say that the clients never asked about planned giving, so they didn’t bring it up


7. advisors worry about giving away money under management because it reduces their own revenue stream, or they can’t figure out how a product or service they provide can be worked into the planning process, so there’s no incentive to suggest it


8. most don’t know much about the many technical issues and avoid the topic so as to not appear to be incompetent or unknowledgeable in front of their clients


9. they don’t want to do team planning with other experts because they will be giving up control of their client if other advisors horn in on the planning process


10. clients are fee sensitive, why should an advisor go spend money to learn something they’ll rarely use and probably can’t bill for?


As it turns out, it is mostly an education issue, but many experts feel that the client MUST say in front of all of their advisors, “I want to make a gift; show me how to make it happen”, before the advisor takes it seriously.


imageUntil this happens, many advisors assume that the client is using them as a fence or a barrier to keep charities and fundraisers away from them.  You know the lines, “my lawyer doesn’t think this is a good idea” or “my broker says I can’t use the deduction, maybe next year”, or “I’d probably do something later, but you know how it is when your CPA says it’s not a good time”, all excuses that make sense, but may not be entirely accurate.  Getting the client to establish their goals and priorities early in the process makes it easier to plan correctly, and it removes many of the objections that may pop up later on in the planning process.


Many individuals are receptive if they see how to give their support away tax efficiently and develop some organized planning to their philanthropy.  What will not work is having a charity believe that it can deputize a tax, financial or legal advisor and make them part of their fundraising or development office by pressuring them to go after charitable gifts from their clients.  That cannot happen because commercial advisors need to be objective and not bring an agenda to the table by promoting a specific charity.  Instead, what can work is a better planning partnership where both the values of the client and his or her financial goals blend into an integrated estate plan.


Recent surveys have shown that less than five percent of professional advisors* bring up the idea of charitable planning in their discussions with clients, and many of those only do so after the client introduces the topic.  The lack of charitable bequests in the estate planning process is a concern since over 70 per cent of families already make annual charitable gifts, but less than six per cent do so from their wills or trusts.  Why is there a difference between the two?  It is probably faulty communication between clients and their advisors, since clients make those decisions to support charitable organizations based on their values and interests, but fail to ask about continuing their legacy in discussions with financial and legal advisors.