Wealth advisors who integrate charitable services into their offerings find it a uniquely powerful opportunity to foster stronger and deeper client relationships. There are clear reasons why, not to mention an element of unmistakable timeliness.
Turning to charitable giving as a business differentiator may be a unique juxtaposition to some. With today’s intersection of the Great Wealth Transfer, the prevalence and embrace of technology, a desire for involvement, and ongoing policy and tax-related discussions, philanthropy now plays a notably distinct role for advisors looking to have an even greater impact on the lives of their clients. According to a report from Fidelity Charitable, On the leading edge: Accelerating firm growth with charitable planning, firms offering charitable planning had 6x the median assets and 3x the organic growth of those that don't.
Three Drivers
Here are three drivers leading advisors to include philanthropic endeavors in their portfolio of services:
- Charitable services driven by technology are leading the pack. One of the most essential traits of a successful wealth advisor is the ability to meet their clients where they are – and clients increasingly desire charitable services that incorporate user-friendly technology, even if they’re not tech-savvy. Donors find giving vehicles such as donor-advised funds (DAFs) more and more appealing because of the tax benefits as well as the donor platforms that make recommending grants to their favorite charities hassle-free. Additionally, vehicles such as DAFs appeal to a broad spectrum of people, including tech-savvy donors, modest givers, younger donors and donors looking to connect with a charitable community.
- More wealth coming online. With an estimated $84.4 trillion of wealth to be transferred between now and 2045, this shift is a powerful catalyst for wealth advisors to quickly understand which charitable service options fit best for them and their clients. It’s reported that women are likely to be the biggest beneficiaries of wealth. Couple that with studies showing that the charitable services women tend to be drawn to include opportunities to network and belong to a community of peers, and it places philanthropy as a key cornerstone for their wealth advisors. With the backdrop of the Great Wealth Transfer, it’s timely for advisors to consider adding charitable services for existing clients and their families. Building relationships with the next generation should be a top priority for wealth advisors concerned about long-term portfolio retention. According to a Cerulli study, 90% of affluent investors who use their advisors didn’t consider their parents’ advisors in their selection process. Millennial heirs are 42% more likely to stay with their benefactor’s advisor if they help with family philanthropy.
- Potentially significant tax changes. Tax policy changes are on the table for 2025. Both sides of the aisle see advantages. It’s expected that lawmakers will put forth new wealth taxes and changes to how investment earnings and estates are taxed. Proposals may even include prospective changes to certain charitable giving vehicles. Given the country’s steep national deficit, the perceived buckets of money will be attractive revenue sources – and policymakers may even try to tap charitable giving or transfers of wealth within and across generations while also considering incentives to encourage more community giving.
Embracing charitable services, advisors find that these conversations with clients are another opportunity to create relationships with the client’s family members who look to inherit much of the existing wealth. Those are pivotal moments during the client-advisor relationship, as families often change advisors after receiving an inheritance. A 2024 study indicates that nearly half of all Americans aim to leave an inheritance, yet only 35% of them plan on discussing their wealth transfer with family. Now’s the time to inject the expertise and guidance a wealth advisor can offer. In addition, there are potential upcoming tax changes, and the moment has arrived to implement these crucial charitable services.
Joseph Fisher is the CEO of Ren, an independent philanthropic technology company, and Sandra Swirski is the founder and CEO of Integer, a full-service advocacy firm in Washington, D.C., specializing in economic and nonprofit policy.