Bankers and Lawyers and CPAs, Oh My! Working with Professional Advisors Date Presentation by: Rebecca Rothey, CFRE, CAP Vice President, Development and Senior Philanthropic Advisor Somewhere, over the rainbow Objectives Understand the roles of professional advisors by the wealth categorizations of their clients Discuss the perspective of professional advisors as they work with potentially philanthropic clients by wealth level Offer suggestions for gift planners roles while working with advisors by category and clients net worth 1
Toto, I don't think we're in Kansas anymore. Greater competition for major and planned gifts Era of blended gifts, creating increased focus on donors overall net worth Advisors play a major role in wealth management and increasingly often philanthropic planning More options for investing and charitable giving than ever before follow(ing) the Yellow Brick(s) Road 2
First mutual fund Created on March 21 1924 Massachusetts Investors Trust Growth in Assets in Donor Advised Funds Source: National Philanthropic Trust Total Number of Donor Advised Funds Source: National Philanthropic Trust 3
We must be over the rainbow! Net worth by centile, U.S. population Source: DQYDJ website based on Survey of Consumer Finances (SCF) by the Federal Reserve Net Worth Centile: Survey of Consumer Finances, 2013 99.9% $30,644,280 99.5% $11,898,128 99.0% $7,869,549 95.0% $1,868,640 90.0% $943,656 80.0% $428,540 70.0% $247,026 60.0% $147,732 50.0% $81,456 40.0% $38,322 30.0% $14,840 20.0% $4,314 10.0% ($2,066) ($20,000,000.00) $0.00 $20,000,000.00 $40,000,000.00 And for retirees Source: DQYDJ website based on Survey of Consumer Finances (SCF) by the Federal Reserve 99% 95% 90% 80% 70% 60% 50% 40% 30% 20% 10% 1% Net Worth Brackets for Retirees in 2013 for the United States Feeral Reserve SCF Data $3,051,500.00 $1,487,000.00 $696,000.00 $415,200.00 $284,800.00 $210,500.00 $145,500.00 $90,700.00 $42,920.00 $6,400.00 ($24,130.00) $11,572,860.00 4
Wealth disparities, seen another way Chart Michael DeGusta, theunderstatement.com March 2011 Data: from 2007, as per www2.ucsc.edu/whorul esamerica/power/wealt h.html via front.moveon.org/whathappened-to-good-olamerican-piechart/#.wvzyd4grliu How many wealthy people is that? Source: James Davies, Rodrigo Lluberas, and Anthony Shorrocks Credit Suisse Global Wealth Databook, 2013 Bankers and Lawyers and CPAs, Oh My! 5
The Professional Advisory World Who Are They? Take special care of those ruby slippers I want those most of all! Bankers / Trustees Ultra-High Net Worth Family office model: manage wealth/financial advise/trust creation and administration/life insurance/estate planning Highly sophisticated Serve as gate keeper Have on-staff philanthropic advisors Some deliberately reach out to nonprofits make yourself known to them You won t be doing the planning May be negotiating on behalf of nonprofit Gifts most likely from alternativegiving vehicle Often prefer gifts during lifetime 6
Bankers / Trustees Very High & High Net Worth Usually separate group at bank More clients per relationship manager Primary goal: assets under management Trust administration Understand source of wealth donor, parent/s Learn how donor s wealth is controlled often in trust Who is the decision maker? some people without brains have a lot to say. Financial Advisors Ultra-High Net Worth Family office (again) or trusted advisor Want to be the quarterback Portion of portfolio with multiple advisors Wealth preservation and transfer priorities Varying sophistication Gate keeper Usually don t initiate the conversation (see Bank of America/U.S. Trust survey) Can be motivated by taxavoidance strategies 7
Financial Advisors Very High & High Net Worth Strive to be the trusted advisor Goal is assets under management Can view charitable gifts as competition Prompt donor to initiate the conversation Open to being educated about gift planning arrangements Prompted by events asset liquidation, death in the family, inheritance Need to get it helps if they re a donor themselves Financial Advisors Affluent & Other Large number of clients Primarily transactional, not relational Obligation to preserve assets for retirement Least understanding of charitable gift arrangements Life insurance is well understood and appreciated Once again prompt donor to initiate the conversation Assess value of your time might not be worth it Marketing driven: Your prompt inquiries through your marketing Educate through marketing I was rusting for the longest time! 8
Estate Planning Attorneys Ultra High Net Worth Wealth transfer planning using gift and estate tax exclusion Asset protection Business transition Family engagement Emphasis on alternative giving vehicles private foundations, donor-advised funds, venture philanthropy, etc. Gifts often negotiated with attorney, philanthropic or other advisor Private foundations are a source of income for attorney Communicate impact and accountability Project or mission-based engagement (before or after the fact) Estate Planning Attorneys Very High & High Net Worth More transactional - the surgeon Default to transferring money to kids More open to alternatives to private foundations Some value assisting clients to find meaning will initiate conversation Guide donor to initiate philanthropic conversation Help donor decide charitable purpose before seeing attorney Discuss philanthropy as a means to transfer values to kids through estate plan Propose DAF as an alternative to a PF Estate Planning Attorneys Affluent & Others One or two times in a lifetime Little influence over clients values or financial decision making Transactional relationship You can be the prompt to encourage planning donors hate paying legal fees Provide information that spurs action e.g. wills guide Provide specific language Use consistent reminders Encourage beneficiary designations 9
You re right. I am a coward! Accountants Ultra-High Net Worth Life-long relationships Best understanding of client s financial situation Least understanding of philanthropy A few are sophisticated, but still focus on tools and techniques Tax avoidance major prompt Do the 990PFs Most open to help from gift planners Must be primary source of charitable motivation Translate tax avoidance into meaning Regular communications outside of tax season Accountants Very High & High Net Worth The family physician - only advisor the majority of your donors see annually Tax avoidance remains primary motivator Close relationships with small businesses Know first when highly-taxable events will occur Educate about your mission Frequent reminders about charitable gifting techniques Examples of how to start conversations about philanthropy 10
Accountants Affluent & Others Transactional relationship Majority, especially solo practitioners, little knowledge of philanthropy See client only annually Most trusted advisor by donors Plan to educate most likely to kill a gift If key decision maker, ask to meet Make their job easier e.g. donor-advised fund instead of multiple charitable gifts We represent the Lollipop Guild Life Insurance Agents All Wealth Levels Are the most open to charitable gift conversations Often are treated as order takers by other advisors Want to help with sophisticated planning Understand the power of leverage Don t understand charitable motivations Stay open Educate about the best way to talk with Clients Invite to join your committees Ask them to help create guidelines to accept policies 11
Brokers All Wealth Levels Open to charitable gift conversations, especially if they sit on NP boards Willing to help with sophisticated planning Have long-term relationships with clients Tend to be competitive goal is financial returns and assets in portfolio Not a top priority Look for those who are donors or on your board Invite to join your committees Include as donor prospects as well as advisors and think to yourself There s no place like Our Missions and Organizations Use your Planned Giving Advisory committee wisely it s about your mission Advisors are often donors, too, treat them accordingly Always thank them, especially after difficult negotiations Steward and recognize advisors when possible and appropriate 12
Doesn t anybody believe me? Questions for Advisors Do you encourage your clients to consider philanthropy? If so, what is your process? Do you have a preferred giving vehicle? If they include private foundations, what is the minimum about they recommend to establish one? At what level of disposable income must a client have before you encourage philanthropy? Is philanthropy an important part of your firm s advisory services? How many staff do you have dedicated to working with clients locally? Nationally? How would you and your staff prefer to work with gift officers? How can I be of help to you as you help your client/s? Questions for Donors Has your advisor ever discussed your values and how they relate to your philanthropy? If so, have those values been integrated into your financial and estate plans? How does my organization fit into those plans? Do you work specifically with a philanthropic advisor? Alternatively does your investment management firm provide holistic services, including philanthropic advice? Has your advisor incorporated your philanthropy into your overall wealth management approach? If so, what giving vehicle/s has your advisor recommended? Have you done that yet? 13
Questions for donors continued Would it be helpful if I worked with your advisor directly? If so, do you have any guidance for me for how you would like me to work with him/her? Has s/he helped you craft a family mission statement and/or goals for your philanthropy? If so, how does my organization s mission fit into your overall philanthropic goals? Is there anything I can do to be of further help to you or your advisor from the perspective of my organization? A heart is shown not by how much you love but by how much you are loved by others. General Tips Always ask your donors if they are working with a professional advisor and, if so, whether they would be willing to share their name/s with you or involve them in the conversation. Ask advisors how they would like to be/are involved in a gifting conversation, and for advice/input/articles. Thank every advisor who refers/helps with a gift. Consider inviting them to their client s recognition event. Keep an up-to-date database of your donors' relationships with their advisors. Host functions that appeal to advisors interests. Create a mailing list & communicate frequently. It only takes a few advisors who get it to really make a difference. 14
Thank you! Rebecca Rothey, CFRE, CAP Vice President of Development and Senior Philanthropic Advisor Greater Washington Community Foundation 1325 G Street NW, Suite 480 Washington, DC 20005 Direct: (202) 263-4766 Main: (202) 955-5890 x 111 Cell: 410-440-2577 www.thecommunityfoundation.org 15
PRACTICAL PLANNED GIVING CONFERENCE SPEAKER EVALUATION Date: Speaker: Name (optional): Please rate the following: Excellent Good Neutral Fair Poor I. OVERALL 5 4 3 2 1 Were your major objectives for this session met? Was the content of the session vital, timely, substantive? Comments: II. RELEVANCE 5 4 3 2 1 Was the subject matter directly related to the requirements of your job? Comments: III. VALUE 5 4 3 2 1 Do you believe the benefits of this session were worth the time, effort and cost? Comments: IV. SPEAKER 5 4 3 2 1 How was their presentation style? Did the session move along at the right pace? Did they have appropriate knowledge on the topic? Comments: V. MATERIALS 5 4 3 2 1 Were the materials clear and organized and appropriately helpful for the session? Comments: Vi. What did you like the most about the session? VI. Any suggestions to improve future sessions? XII. How many years of gift planning experience do you have?