Next Generation Planner: May 2022
Jason Anderson, CFP®, CPA, is a lecturer and academic program associate at the University of Kansas School of Business and a doctoral student in the personal financial planning program at Kansas State. He also owns Gradmetrics LLC, a college and student loan planning firm.
Ashlyn Rollins-Koons is an investment professional in Chico, California, at NorCal Financial Group. She is also a doctoral student in the personal financial planning program at Kansas State.
Differentiation is key for the modern financial planner who wishes to retain and attract clients. Many advisers accomplish this by creating a practice that specializes in a specific aspect of financial planning (e.g., business succession planning, investment management, expatriate tax issues) or tailoring their communications to reach a certain audience. Having a well-developed niche in an area of passion can be a real boon to creating a successful and profitable practice.
In this article, we suggest adopting a strategy to market your developing expertise in charitable giving. As baby boomers continue advancing toward retirement, questions around the transfer of wealth are a top concern. Undoubtedly, many clients will wish to leave at least a portion of their wealth to charity. And what better way to spend your time than with generous clients? Ask any wealth adviser or development director about their work with charitable clients and they will readily tell you stories of virtue. Donors want to make a lasting difference, and so do you. So why not marry your love for impact and your expertise in finances? There is a way.
Developing Your Current Client Base
When attempting to grow a practice focused on charitable giving, some financial planners neglect to look at their current book of business. Your clients have causes or organizations they already support. Have you asked them about their charitable intentions? Taking time to develop relevant questions can guide your conversation. For a useful resource, check out The Osborne Group’s strategic fundraising questions (visit www.theosbornegroup.com/tools-resources and click on the “Strategic Questions” link toward the bottom of the page). Although The Osborne Group developed this list for professional fundraisers, many of the questions are relevant to charitable giving discussions with clients.
Another way to bring up the topic of charitable giving with your clients is to identify the typical planning meeting that can serve as a “trigger” to introduce the subject. Opportunities for these discussions include estate planning, socially responsible investments, tax strategies (including end-of-year planning), and RMDs.
Attracting the Right Clients
Even if you already have a charitable client base, you may find it helpful to search for opportunities to connect with people who have charitable intentions. The good news is most American households already donate to charity (List 2004). Advisers would do well to look for people who volunteer their time. Bekkers and Wiepking’s (2011) review of charitable giving literature suggests that older individuals in addition to those with high incomes and wealth are associated with financial giving. Those who identify as religious might also be charitably inclined (Bekkers and Wiepking 2011). While prospecting, it may be helpful to keep these attributes in mind and seek to reach people who have these characteristics.
Finding these individuals need not be a difficult search. Ask your current charitable clients if they have friends who are also involved with the organizations they care about. You may decide to host donation drives or fundraising dinners and ask your clients to bring a guest. During the holidays, you could host toy collections, coordinate food drives, or promote other family-oriented giving events. Keep in mind, however, the push toward philanthropy can (and should) be more holistic than the typical end-of-year focus for many advisers.
Building Networks of Impact in the Nonprofit Sector
One way to build your niche in charitable giving is by developing a network of influence in the nonprofit ecosystem. Connecting with professionals in the planned giving space will familiarize you with the charitable inclinations of your community. You can find planned giving professionals in several arenas, such as the Association of Fundraising Professionals (https://afpglobal.org/) or the National Association of Charitable Gift Planners (https://charitablegiftplanners.org/). A quick search on LinkedIn for the Certified Fund Raising Executive or CFRE credential (www.cfre.org) may also uncover connections.
If you are looking to build your practice in charitable giving, you likely have philanthropic tendencies. Volunteering for your favorite causes and organizations will provide opportunities to meet potential clients who share a similar passion, and your involvement will go a long way in gaining their trust. You might also consider joining the board of directors, organizing events, or increasing your involvement in fundraising. Boards are always looking for members who have a talent for raising funds for key organizational priorities. Are you willing to chair the fundraising committee? Can you serve as an outsourced planned giving officer for your organization, attending donor meetings with the executive director? Many smaller organizations cannot afford a specialist in this area of development. Could you connect your clients to the nonprofit? How about organizing the annual gala? Chairing the capital campaign? Taking on these roles will support your local nonprofits and undoubtedly garner goodwill for you (and your firm). You also will meet like-minded people at these events who may be looking for an adviser who shares their passions.
It would also be valuable to talk to someone at the organization you are interested in volunteering with about their rules regarding business promotion or prospecting. While some organizations might welcome you to share your work with other volunteers, others might prohibit any promotional efforts. Regardless, volunteering should be an authentic expression of an adviser’s passions rather than solely an attempt to attract new clients.
After all this work, your efforts might pay off in a healthy pipeline of new clients. The nonprofit itself might become a client. Your spot on the board could lead to the ability to manage the nonprofit’s reserves to grow available funds for the cause’s mission. You might even become the de facto outsourced financial planner for the nonprofit’s constituents and a trusted adviser for the planned giving officer. This becomes a true win-win relationship: many nonprofits are happy to have a stable source of knowledge in this area and you grow your practice through adding significant and meaningful value.
Continuing Education and Designations
Advisers who wish to build their expertise in charitable giving can pursue designations beyond the CFP® mark. Select options include the Chartered Advisor in Philanthropy (CAP), Master Financial Advisor-Philanthropy (MFA-P), and the Certified Kingdom Advisor (CKA).
The CAP (www.theamericancollege.edu/desinations-degrees/CAP), produced by the American College of Financial Services, requires three years of experience, the completion of three courses, adherence to a code of ethics, and recertification / continuing education to maintain the credential. The CAP designation is geared toward advisers and fundraisers.
The MFA-P (www.knowledgebureau.com/site/program/mfa-p) is a co-launched program produced by the Canadian Association of Gift Planners, Spire Philanthropy, and the Knowledge Bureau and requires the completion of three online courses (or 18 modules) with examinations at various points in the curriculum. Recertification requires 15 hours of continuing education every year.
Also of note is the CKA designation (https://kingdomadvisors.com/association/designation), which offers a curriculum covering topics such as generosity and stewardship. Obtaining the CKA provides a point of connection to charitable clients motivated by religion (Christianity, in particular).
Outside of a designation, advisers can complete the Philanthropic Solutions in Financial Planning Certificate Program offered jointly by the Financial Planning Association and the American Heart Association. The program requires six modules covering the topics of philanthropy, bequests, annuities, and estate planning vehicles. As a bonus, each course counts for 1 CFP® CE credit. Additionally, successful individuals gain access to the American Heart Association Professional Advisor Network.
Conclusion
Most people want to make a difference with their time and money, and advisers who help their clients achieve this goal will set themselves apart in their community. Looking to your passions to differentiate yourself and develop your niche could grow your practice, and it will certainly leave you with a greater sense of satisfaction at the end of each workday. After all, there is a growing number of studies that show charitable giving is highly correlated with happiness (e.g., Boenigk and Mayr 2016). Building up your knowledge and skill set in this area will make you a sought-after asset to clients and nonprofits alike. Many of us joined this profession to make a significant impact in the lives of our clients. A niche in charitable giving is a perfect way to do it.
References
Bekkers, René, and Pamala Wiepking. 2011. “Who Gives? A Literature Review of Predictors of Charitable Giving Part One: Religion, Education, Age and Socialisation.” Voluntary Sector Review 2 (3): 337–65. https://doi.org/10.1332/204080511X6087712.
Boenigk, Silke, and Marcel Lee Mayr. 2016. “The Happiness of Giving: Evidence from the German Socioeconomic Panel That Happier People Are More Generous.” Journal of Happiness Studies: An Interdisciplinary Forum on Subjective Well-Being 17 (5): 1825–46. https://doi.org/10.1007/s10902-015-9672-2.
List, John A. 2011. “The Market for Charitable Giving.” Journal of Economic Perspectives 25 (2): 157–80. https://doi.org/10.1257/jep.25.2.157.