{"id":6478,"date":"2021-07-19T09:11:51","date_gmt":"2021-07-19T09:11:51","guid":{"rendered":"https:\/\/emoneyadvisor.com\/?post_type=thought_leadership&p=6478"},"modified":"2024-06-17T17:04:26","modified_gmt":"2024-06-17T17:04:26","slug":"bridging-generational-wealth-with-smart-philanthropy","status":"publish","type":"thought_leadership","link":"https:\/\/emoneyadvisor.com\/blog\/bridging-generational-wealth-with-smart-philanthropy\/","title":{"rendered":"Bridging Generational Wealth with Smart Philanthropy"},"content":{"rendered":"

It’s not always easy to engage family members around the discussion of wealth, especially across multiple generations. This is due to the vulnerable nature of discussing money. And hierarchy can often take hold when the head of household, oldest child, or \u201cdecision-maker” controls the funds and the conversation. However, one effective and non-threatening way to think about bringing a family together in the planning process is through charitable giving.<\/p>\n

Philanthropy is a powerful way for families to pass along shared beliefs and values. A charitable planning conversation is all about learning more about one another, discussing a shared legacy, and ultimately, supporting charitable causes that are close to your hearts. This usually leads to a feel-good and productive conversation enjoyed by both the financial professional and the end-clients or family.<\/p>\n

Getting the Charitable Conversation Started<\/b><\/h2>\n

There has never been a better time to bring up charitable planning. History has shown that during challenging times or disaster, Americans respond with philanthropy. And the past year and a half\u2014involving the COVID pandemic, natural disasters, and social injustices\u2014has resulted in overwhelming need felt across every community. In record-breaking numbers, Americans are stepping up to meet this need and learn about how they can put their wealth to work to support their favorite causes.<\/p>\n

As a financial advisor, you can add value to their charitable giving process by introducing strategies that help your clients give more, and more effectively, to these charitable organizations.<\/p>\n

Even when we aren’t in these unique circumstances, it is safe to assume that your clients are supporting charity in one way or another. About 90 percent of high-net-worth individual households give to charity year over year.1<\/sup>\u00a0And nearly nine out of ten families discuss giving at least once a year. Yet, only about 16 percent have discussed this topic with their financial advisor.1<\/sup><\/p>\n

This is a gap that every advisor can fill. Those who incorporate charitable planning into their practice find that it helps them engage “the unengaged spouse” and the next generation within a family. Bringing up charitable giving is an easy way to deepen client relationships and differentiate yourself as a financial professional.<\/p>\n

How to Approach Multi-Generations of Families in Charitable Giving<\/b><\/h2>\n

We conducted a recent study2\u00a0<\/sup>at Fidelity Charitable\u00ae, to look at attitudes and motivations across different generations of donors and detect any shifts in behaviors during these unprecedented times. The research found that roughly three-quarters of Millennials identify as philanthropists. This is in comparison to 35 percent of Baby Boomers and 48 percent of Gen X!<\/p>\n

It’s evident that as this generation continues to age and inherit wealth, they will be looking for guidance on how to make a difference with their money. And it’s important to remember that giving takes many forms\u2014it’s not just money, but also volunteerism, community service, and social cohort giving. We are seeing that these younger generations are eager to \u201cget their hands dirty” and truly be a partner in doing the work. The money is only part of the solution.<\/p>\n

This distinction in how each generation views themselves is a valuable consideration for advisors and should dictate when and how to approach charitable giving conversations across these groups.<\/p>\n

Planning for Wealth Transfer and Philanthropy<\/b><\/h2>\n

When wealth passes from one generation to the next, there’s a likely chance that the inheritance will be removed from the financial advisor it has been entrusted with. It’s imperative for financial advisors to be engaging across multiple generations to keep those assets in-house.<\/p>\n

Families are reconsidering their motivations for giving and how their philanthropy carries forward their values, aims, and objectives. It’s promoting deeper intentionality, humility, empathy, understanding, and trust. These shifts are prompting families to reflect on what they seek to build now and how it informs their legacy.<\/p>\n

The legacy and estate planning discussion provides advisors a context to do this. Advisors should be having open, honest conversations about clients’ plans to leave assets\u2014whether it’s going to heirs or philanthropic causes. Questions such as ‘What role will you play in your children’s and grandchildren’s future?’ or ‘What kind of legacy do you want to leave for your family?’ can help spur discussion.<\/p>\n

There are a variety of ways you can plan for the future and carry on your charitable legacy. A few strategies that can help you weave those philanthropic topics in your planning conversations:<\/p>\n