Charitable donations can help the community while reducing your client’s tax burden. Yet for many clients, tax credits are the last thing that comes to mind when they think of donating. That’s why as a financial advisor, it is better to focus your clients’ values and personal stories when discussing philanthropy.
“Clients want their financial advisors to know them beyond just their personal financial statements and net-worth,” says Brad Offman, vice president of strategic philanthropy with Mackenzie Financial Corp. in Toronto. “They want their financial advisors to know their families, their children and their personal values.”
These tips will help you broach the subject of philanthropy with clients:
> Spot potential “givers”
Find ways to identify those clients who might be more prone than others to charitable giving.
Clients who are struggling to help their children financially may be less interested than others in making charitable donations. On the other hand, clients with no children or with children who are successful and independent are usually open to talking about charitable giving, says Jo-Anne Ryan, vice president of philanthropic advisory services with TD Waterhouse in Toronto.
> Ask about volunteering
Talk to clients about their personal interests and activities to determine the types of projects or causes they might be interested in helping.
Find out whether clients are involved in any volunteer activities, such as sitting on a board of directors or coaching a children’s hockey team, says Offman. Use those points to introduce the topic of philanthropy in the context of financial planning.
> Start with the tax return — but focus on the client
If you’re doing a full financial plan with a client, use the tax issue as a starting point for discussing charitable giving, but then move on. Make the client, not the tax return, the focus of that conversation.
If you notice charitable donation credits on a client’s tax return, ask him or her to explain more about the donation, the charities they support and their interests, Offman says. Indicate that you may be able to help incorporate their philanthropic goals into the financial plan.
> Exploit technology
Let your computer help you introduce the topic of philanthropic giving to your clients.
Most financial planning software programs include tools that incorporate philanthropic giving into the plan. These tools can function as a natural segue into a conversation about donations when you are reviewing the client’s account, Offman says.
“Charitable giving should be brought up in the context of a very holistic planning discussion,” he says. “It doesn’t have to be brought up out of the blue.”
> Wait for the right time
Charitable giving is a very personal subject for some clients, so you must approach the topic with caution, especially toward the timing.
“You have to be in the right place to start talking about [charitable giving],” says Diane MacDonald, executive director of the Canadian Association of Gift Planners in Ottawa. “Sometimes it comes up when there’s a life changing occurrence in that person’s life and that opens a door to a conversation.”
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