With the holiday season upon us, so are thoughts of charitable giving. Financial advisors are uniquely positioned to ensure that their clients' giving satisfies philanthropic goals, as well as functions within their financial plan.
We know from various charitable giving studies that donors generally aren't motivated by the tax savings they may get from making charitable gifts. Instead, they care about donating to worthy causes and about making an impact with their gifts. Often, they also may have a personal connection to the charities they support.
Understanding clients' motivations, rather than focusing on the financial benefits of charitable giving, can help you deepen your relationships and potentially even build your business through referrals. But how can you uncover those motivations? And then how can you apply them to an impactful giving plan?
Understanding "The Planning Horizon"
In their book, The Right Side of the Table, Scott and Todd Fithian present the concept of "The Planning Horizon." They explain that conversations that take place above this horizon address your clients' deepest and most personal intent for their wealth, while conversations that take place below the horizon focus on the products and strategies that can help clients carry out their intention.
Nowhere is this strategy more effective than in discussions about philanthropy.
If incorporating philanthropy into your practice is important to you, begin by adding questions about charitable giving to your client intake forms. What organizations do your prospective clients give to each year and in what amounts? How do they give—by writing a check or donating assets?
Gathering this basic data at the outset of the relationship sets the framework that philanthropy will be a cornerstone of your planning discussions. More important, this offers your prospective clients an opportunity to tell you about the formative experiences that have sparked their passion for giving back.
