The Philanthropic Conversation

Insights from HNW individuals and their Advisors about the potential to engage in meaningful conversations on charitable giving

A ground-breaking research study to explore the philanthropic conversation in Canada and assess the opportunity for Canadian financial advisors to lead philanthropic discussions with their HNW clients. This project was a collaboration of several non-profit sector leaders, including The GIV3 Foundation, the Canadian Association of Gift Planners (CAGP), Philanthropic Foundations of Canada (PFC) and the BMO Wealth Management.

Background

In late 2013, US Trust and The Philanthropic Initiative published American research which revealed that many High Net Worth Individuals (HNWIs) would appreciate and value the advice of their financial advisor (FA) in helping them reach their philanthropic aspirations. However, such philanthropic conversations are seldom taking place, and when they do, the focus is often on the technical and tax aspects of giving, while HNWIs prefer to discuss their values and passions regarding giving. Such philanthropic discussions are likely to enrich the client-advisor relationship, and strengthen future business opportunities for FAs.

Anecdotal evidence has suggested that the situation in Canada is rather similar. BMO, CAGP, GIV3 and PFC, set out to understand the situation in Canada and assess the opportunity for Canadian FAs to lead philanthropic discussions with their HNW clients.

Two quantitative online surveys were conducted:

  1. A sample of 258 financial advisors recruited in partnership with a national membership association, who work with HNW clients with investable assets greater than $1MM.
  2. A sample of 178 HNWIs from an Ipsos online panel, with investable assets greater than $1MM.

Executive Summary

The vast majority of High Net Worth Individuals are already philanthropic, though there is room for improvement in the levels of giving. Financial advisors have the potential to have deep and meaningful discussions with their HNW clients on the topic of charitable giving. However, the incidence of such conversations is low. HNWIs that have had philanthropic conversations with their FAs, have found them useful and highly satisfying.

This implies that FAs should feel confident initiating philanthropic discussions because their clients are already givers. When approached correctly, these conversations will be useful, satisfying and help deepen the impact of HNWIs’ philanthropic giving.

HNWI donors are motivated mainly by emotional considerations such as their desire to impact the community and their passion for a cause. They are also interested in ensuring that their gifts are used wisely.

FAs should take a balanced approach to the philanthropic conversation, with an emphasis on their clients’ personal motivations, values and desire to make a difference, in addition to technical considerations and tax implications. It is valuable for them to know the basics about how to review charities to help clients make wise choices.

HNWIs are comfortable discussing philanthropy early in the relationship and, when they have such conversations, they agree that it strengthens their relationship with their FA.

FAs should feel comfortable raising the philanthropic discussion early in the relationship. They will likely improve their relationship and business if they bring a balanced discussion with a focus on the interests and concerns of HNW individuals (making an impact, expressing their values, wise use of donations).

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