Advisors Underestimate Wealthy Clients' Philanthropic Goals, Survey Finds

Many financial advisors underestimate their high-net-worth clients' desire to discuss their charitable goals and passions while overestimating the importance of tax benefits as a motivation for giving, a report from U.S. Trust and the Philanthropic Initiative finds.

Based on a survey of wealth advisors, trust and estate attorneys, tax professionals, and individuals with at least $3 million in investable assets who are engaged in philanthropy, the report, The U.S. Trust Study of the Philanthropic Conversation (7 pages, PDF), identifies several disconnects between the wealthy and their financial advisors with respect to the subject of giving. For example, while 89 percent of the financial advisors surveyed said they discuss philanthropy with some of their clients and 71 percent said they regularly ask clients about their interest in charitable giving, only 55 percent of high-net-worth individuals say they discuss philanthropy with a professional advisor.

According to the survey, 33 percent of advisors said they had initiated a discussion about philanthropy with a client, while their clients initiated the conversation 20 percent of the time. Among high-net-worth individuals who have discussed the topic with an advisor, 51 percent said they typically are the ones to initiate the conversation, while their advisors did so just 17 percent of the time. For their part, advisors indicated that they are more likely to bring up the subject of philanthropy once they have greater knowledge of a client's personal (40 percent) or financial goals (47 percent), or when they are aware that a client volunteers or is active in the community (43 percent). However, fully a third (34 percent) of the high-net-worth individuals surveyed said the topic should be raised during the very first meeting, and 90 percent agreed that the discussion should occur within the first several meetings with an advisor.

The survey also found that four out of ten (41 percent) high-net-worth individuals are fully satisfied with the philanthropic conversations they have with their advisors, and that seven out of ten (71 percent) advisors reported discussing the more technical aspects of philanthropy — tax considerations or wealth structuring, for example — while more than three out of ten (35 percent) said they initiated such conversations by discussing a client's philanthropic goals or passions.

"Discussing philanthropy is an excellent way for advisors to learn what matters most to their clients," said Claire Costello, national philanthropic practice executive for U.S. Trust. "The vast majority of wealthy individuals give to charity, and many cite charitable giving as one of the greatest freedoms of wealth. Philanthropy today is no longer simply what one does with 'what's left,' but rather a pivotal consideration at the front end of the wealth structuring process. For this reason, we are seeing individuals and families rely increasingly on advisors to help them integrate their philanthropic pursuits into their overarching wealth plan."

"Study Reveals Disconnects in Philanthropic Conversation." Bank of America Press Release 10/09/2013.