Wealth managers are failing clients by not taking a more active role in facilitating their philanthropic work, according to experts at Spear’s 500 Live.
Speaking during the ‘Philanthropy: can you master the art of giving?’ panel, presented in association with Stewardship and the Charities Aid Foundation (CAF), Joe Crome, head of business development and the American Donor Fund at CAF, noted the divide between HNW appetite for giving, and the ability of advisers to deliver the necessary guidance.
[See also: Wealth managers key to boosting donations as UHNWs give less]
‘The market of philanthropy is growing hugely,’ he observed, citing the CAF Giving Report 2023 which found £18 billion had been given to charity last year, an increase of £1 billion on the year prior. A separate survey of 500 HNWs found two-thirds of respondents said being a philanthropist and giving away money is ‘very important to them’.
Yet advisers are not able to provide the guidance their clients desire. A CAF survey of 200 advisers found one in five respondents had ‘no idea’ how to talk to clients about philanthropy, 53 per cent never discussed philanthropy in any context and around 70 per cent did not bring up philanthropy during the fact-finding and on-boarding process.
Nicola Johnson, chief customer officer at Stewardship, explained this is a growing issue for the wealth management industry because the way UHNWs approach philanthropy is changing. ‘In the past there have been some traditional models of philanthropy that have been a bit more siloed,’ she explained. ‘There’s a much bigger appetite now to view philanthropy as part of a much bigger wealth management picture.’
It is therefore the role of wealth managers and other advisers to ensure they are properly equipped with how to address the topic.
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The role of a wealth adviser
‘Most advisers just don’t think it’s their job,’ observed George King, senior wealth manager at MASECO. ‘We’re trained to talk about taxes, inheritance, cash flows and so forth, and there’s nothing in the training of most advisers of any kind to talk about philanthropy.’
He added: ‘It’s not part of the basic current expectation of what it means to be a competent professional to have this in your vocabulary, to have this tool set, this knowledge base. And it’s a little bit silly.’
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There are myriad benefits to bolstering this area of knowledge and advice.
‘The first, best reason to do this is because it’s what your client wants to do and you can facilitate this,’ continued King. But greater engagement and understanding of a client also produces a more fruitful, loyal and long-lasting client-adviser relationship. ‘Time and affinity is what drives the value in our businesses in terms of how we’re working with our clients.’
Philanthropy and the next generation
Crucially, it is also a way to engage the next generation of wealth holders. Nepheli Rigas, a second-generation inheritor who runs her family office and is a founding member of the UK for UNHCR advisory board, explained how a lack of engagement from the advisers around her left her at a loss when it came to furthering her philanthropic journey.
She encouraged advisers to truly listen to the next generation.
[See also: Rory Stewart on how a novel idea changed global giving]
‘My generation can come in, we’re younger, we have more time to be able to dedicate to good causes,’ she said. ‘But we’re a very different generation from the ones above us. We want greater transparency. We want to know where the money we’re donating is going, and it’s a big opportunity for organisations that are willing to be transparent because they are going to get commitments from the younger generation.’
Speaking to wealth advisers who want to engage with the next generation, she added: ‘Come talk to us, we want to engage, we want to do good. Find out what really matters to us. Any sort of engagement in that way will have a net positive result.’
Spear’s 500 Live 2024 is presented in association with our partners, Multrees, Henley & Partners, Sotheby’s International Realty, Stewardship, CAF, The Kusnacht Practice, Invest Barbados, Institut auf dem Rosenberg and Justerini & Brooks.
