Don’t overlook charitable giving

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Charitable giving is an important component of financial planning that advisers often overlook.

The vast majority of high-net-worth households — 98.4% — give to charity, according to research from Indiana University.

A recent U.S. Trust study also found that affluent individuals rank philanthropy as their third most important use of wealth, immediately following financial security for their family and financial independence.

With the goal of educating its advisers and RIA firms about charitable planning, Fidelity Charitable, the independent public charity of Fidelity Investments, has launched a practice management program.

“Our mission is to make charitable giving more accessible,” says Krystal Kiley, vice president of relationship and practice management. “A lot of clients are looking for help from advisers, but there’s a major disconnect between client needs and adviser knowledge on philanthropy.”

Only about 14% of advisers talk about charitable giving, Kiley says.


The new Charitable Planning Practice Management program will be available to Fidelity advisers and firms as a complimentary offering.

Its focus will be on teaching best strategies for adding charitable planning to their service offerings and systematically integrating philanthropy into client portfolios, Kiley says.

The firm will also introducing the Fidelity Charitable University as part of the program.

The initiative will include courses and workshops that qualify for continuing-education credit, as well as calculators, case studies, planning tools and research guides, to assist advisers put into practice what they learn.

Advisors may want to help clients research charitable giving, which overall could top $8 trillion as more baby boomers retire, according to a new study from Merrill Lynch and Age Wave. Advisors can help clients with their research.
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The content is built upon in-house expertise from experienced advisers and lawyers and covers key topics such as the essentials of charitable planning, engaging clients’ families with charitable giving and funding philanthropy through non-public assets, Kiley says.

“There’s $30 trillion of assets in motion right now that’s expected to transfer from the boomer generation to their heirs,” she says.

“What many people don’t realize is that close to a third of that wealth is expected to end up in charitable giving. As a result, this is an important area where advisers can differentiate themselves and stand out from the competition,” Kiley says.

As the second-largest grant-maker in the U.S. behind the Bill & Melinda Gates Foundation, Fidelity Charitable handles more than 80,000 donor accounts and has made $23.4 billion in donor-recommended grants since its inception in 1991.


“As financial advisers, we should be focused on how to give our clients holistic advice that covers all their financial objectives, including philanthropy,” says Jon Jones, chief executive of Brighton Jones, a Seattle-based wealth management firm that participates in the program.

Making sure that clients are helping the causes about which they are passionate is often the difference between life planning and mere investment management, and it “deepens relationships with clients and opens up new opportunities,” he says.

Jones and his firm have been using Fidelity Charitable’s resources for more than a decade to help them with more complex giving situations.

“If you are just giving money to charity it’s pretty simple. As soon as you have some little nuance, whether it involves liquid assets or real estate or pre-[initial public offering] stock, it quickly turns very complicated with lots of rules,” Jones says.

“That’s where Fidelity has been extremely helpful,” he says.

There are also clear financial advantages to diverting client assets to donations such as lowering tax burdens in a capital gains-heavy year, Jones says.


Jones also notes that while other custodians have comparable depth and background on philanthropic giving, Fidelity’s packaged program is unique.

A spokesman for TD Ameritrade confirmed that the firm doesn’t have a similar offering.

A Charles Schwab spokesman couldn’t be immediately reached for comment.

Fidelity Charitable expects to roll out additional offerings under the program next year, such as the opportunity to network with fellow philanthropy-savvy advisers.

This story is part of a 30-30 series on smart strategies for RIAs. It was originally published on July 22.

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