The Benefits of Talking about Charitable Contributions

Those that give to charity are often high net worth clients and their families that have put a lot of work into accumulating wealth. These clients largely use financial, tax, and legal advisors to assist them in growing and protecting their assets. The majority of this group have a strong desire to support the causes that mean the most to them during life and after death.
All too often, financial advisors do not initiate the discussion about charitable contributions—even though their clients would likely appreciate the input on these matters. Some clients may not be aware of how their financial advisor can guide them in their donation efforts.
This is unfortunate, as there are many benefits to those financial advisors that engage clients in this conversation. It could range from bringing in additional AUM from current clients, deepening relationships or differentiating themselves from other wealth planners.
When advisors become aware that the majority of their clients can benefit from the charitable giving discussion, they are more likely to have such a talk with their clients. Here’s some things that wealth planners can discuss with clients:
A large number of donors do so by either cash or credit card. Both of these methods are the least tax-efficient ways to donate, but many clients aren’t aware of other options for charitable giving.
Wealth planners can assist clients by identifying appreciated publicly traded securities. Upon donation, clients can avoid capital gains taxes on them as long as they’ve been held for longer than a year. After donation, if the client and advisor want to acquire them again, they can be repurchased at current value.
Advisors can help identify other assets like real estate, insurance, art or collectibles that client no longer want or need. In a lot of circumstances, these can be donated as charitable giving at fair market value.
Wealth planners can help clients wanting to sell a business to donate some or the entirety of privately held stock before the sale to avoid or minimize capital gains or other taxes.
Financial Advisors can often manage the charitable contributions so that clients can receive thorough, consistent analysis of performance advice.
Advisors can assist clients in setting aside money for charitable contributions during their acquisition years so they can continue donating during the draw down period.
Wealth planners can help clients donate the appropriate amounts—sometimes finding that they can give more than they thought.
Advisors can help prepare clients to receive a stream of income during retirement and still provide support to their favorite charity.
Without initiating occasional conversations about charitable contributions, the client may assume that their financial advisor cannot be helpful or has no reason to be involved in this decision.
For your clients to receive the best overall tax, investment, and legal advice, it is important to discuss charitable contributions with their financial advisors. There may be some initial cost for this advice, but in the end, clients, their advisors, and their favorite charities will all benefit enormously.