In a 2023 survey of 421 wealth managers, 20% say they regularly bring up charitable giving with their wealthy clients. Another 45% will discuss charitable giving occasionally. A quarter will do so rarely. Eight percent will only do so if the wealthy client brings up the matter, while half that number avoids the topic.
This means that many wealthy philanthropic investors are not discussing a critical part of their lives with their wealth managers. When wealth managers discuss the causes their wealthy clients care about, opportunities usually exist to add value and profit. However, wealth managers need to approach the conversations focused on their wealthy clients to maximize these opportunities.
Wealth managers who address charitable giving with their wealthy clients fall into two segments. One segment, which is four times larger than the other segment, is those who discuss the mechanisms of various charitable gifts. The other segment focuses on conversations about the outcomes the wealthy clients aim to achieve.
Based on self-report measures, the wealth managers in the client outcome segment are significantly more effective than those discussing charitable gifts’ mechanics. This and many other studies of wealth management business development strategies research suggest that concentrating on what matters to clients instead of their technical proficiencies is consequential.
Wealth managers must know how the various charitable strategies and products work. For example, explaining how donor-advised funds differ from private foundations is essential. Understanding the big differences and nuances concerning the functioning of charitable trusts is critical. Without question, wealth managers must be technically proficient. However, based on these findings, technical proficiency will only generate a limited amount of business and likely mitigate the gifts charities receive.
When wealth managers help wealthy philanthropic investors make smart decisions, clients, charities, the wealth managers themselves, and other professionals significantly benefit. Key to this approach is concentrating on the outcomes wealthy clients desire. There is a robust 4-point process for uncovering charitable intent, objectives, and limitations and crafting narratives that best resonate with wealthy philanthropic investors.
For wealth managers, there are a growing number of resources they can use to help wealthy, philanthropic investors make smart decisions. Many of these resources will come from providers such as trust companies and technology platforms that administer and support charitable gifts. The providers aim to foster philanthropy and make money by winning the wealth managers’ business.
Russ Alan Prince is the executive director of Private Wealth and a strategist for family offices and the ultra-wealthy. He has co-authored 70 books in the field, including Making Smart Decisions: How Ultra-Wealthy Families Get Superior Wealth Planning Results.
