Advisers looking for ways to diversify their revenue streams in the years ahead should consider becoming experts in the field of philanthropic advice. High-net-worth individuals are increasingly interested in giving something back to the community through charities or the arts – they want philanthropy to be an integral part of their wealth planning process.
Tapping the giving vein simply involves making philanthropic concerns part of your conversation with clients. Integrate their community and cultural interests and desires into your fact find. It could open up big new opportunities – for both of you.
Hewison Private Wealth director Chris Morcom said high-net-worth clients appreciate their trusted adviser taking the time to find out about their charitable interests and their desire to give something back if they can. In fact, these clients are increasingly likely to actively seek professional financial advice before making decisions about their charitable giving, and they’re happy to pay for the service.
In order to deal with philanthropic client requirements effectively, you’ll need an understanding of appropriate structures, including whether it is better for a client to make direct donations or start their own Private Ancillary Fund (PAF).
Dr Greg Nazvanov, founder of Inkom Wealth and an active philanthropist himself, said he has found very few financial advisers currently in the game who can call themselves philanthropy experts, one reason for which is that the nitty-gritty of concepts like establishing and running a PAF can be quite complex.
However, Nazvanov said financial planners definitely have an opportunity to increase their involvement in this area. He is actively involved in Kaplan courses to teach planners about providing philanthropic advice.
“Clients are going to increasingly ask ‘have we done anything for our community? What sort of footprint are we going to leave?’” he said. Advisers will be called upon to help them answer those questions in a fee-for-service, best-interests marketplace.
It is mainly the large financial institutions actively offering philanthropic advice and trustee services. ANZ and CBA confirm that their private-banking arms are setting up hundreds of PAFs each year and managing some of the largest private charitable funds in the country.
However,Nazvanov said independent financial advisers definitely have a role to play if they can obtain the skills and are prepared to take the time to engage clients on this topic.