One in four financial advisors expect clients to increase charitable giving to offset anticipated tax hikes, but only 52% of advisors proactively offer charitable planning advice to their clients, according to a survey released Wednesday by the Fidelity Charitable Gift Fund.
The 2010 Fidelity Charitable Gift Fund “Advice & Giving” online survey, which was conducted between May 21 and 26 with 503 financial advisors, found that 87% of financial advisors expect income taxes to increase for most of their clients in the next 12 to 18 months and 26% anticipate that clients will increase charitable giving as a result. In addition, 48% of advisors expect their clients to maintain their level of giving despite market uncertainty. Yet only 52% of financial advisors proactively offer charitable planning advice even though 63% believe clients would be interested in it.
The survey found that 44% of advisors do not proactively offer charitable planning advice because they see philanthropy as a client’s personal decision. Other reasons they are not proactive around charitable giving, include: clients have not requested help in the area (52%) and they do not feel qualified or knowledgeable enough on the topic (31%).
“Today, more than ever, high-net-worth investors are looking to their advisors for comprehensive financial planning advice and tax strategies,” Sarah C. Libbey, president, Fidelity Charitable Gift Fund, said in a press release. “By integrating charitable planning within a wealth management offering, advisors have the potential to deepen existing client relationships, and open up multi-generational planning opportunities.”
Of those advisors who incorporate charitable giving advice into their planning practice, 65% say it is an important aspect of their client relationships. Eighty percent of advisors say the No. 1 benefit of offering advice on charitable planning to their clients is that it’s a relationship builder, while 72% say it positions them as a broad financial expert, 61% say it keeps assets under the advisor’s management and 56% say it leads to a multi-generational relationship.
Thirty nine percent of advisors expect clients to increase their use of donor-advised funds over the next five years, while 20% expect clients to increase their use of private foundations. The simplification of the charitable giving process was the No. 1 reason why advisors thought donor-advised funds’ usage would increase, followed by ease of administration (74%) and favorable tax treatment (58%).
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