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Charitable giving: New help for advisors

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An important component of financial planning clients care about but advisors may be overlooking? Charitable giving.

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 advisors 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 advisors, but there’s a major disconnect between client needs and advisor knowledge on philanthropy.” She notes that only about 14% of advisors talk about charitable giving.

The new Charitable Planning Practice Management program will be available to Fidelity advisors 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 be introducing the Fidelity Charitable University as part of the program.

The initiative will include courses and workshops that qualify for CE credit, as well as research guides, case studies, planning tools and calculators to assist advisors put into practice what they learned.

The content is built upon in-house expertise from experienced advisors and lawyers, according to Kiley, and cover key topics such as the essentials of charitable planning, funding philanthropy through non-public assets and engaging clients’ families with charitable giving.

“There’s $30 trillion of assets in motion right now that’s expected to transfer from the Boomer generation to their heirs,” Kiley notes. “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 advisors can differentiate themselves and stand out from the competition.”

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

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

Jones and his firm have been using Fidelity Charitable’s resources for over 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-IPO stock, it quickly turns very complicated with lots of rules. That’s where Fidelity has been extremely helpful.”

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

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

A spokesman from TD Ameritrade confirmed that the firm does not currently have a similar offering. A Charles Schwab spokesman could not 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 advisors.

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