Charitable giving planning can strengthen advisor/client relationships

As investors increasingly seek advice that goes beyond portfolio construction and performance, new research highlights charitable-giving conversations as an under-realized aspect of financial planning.

T. Rowe Price has published a new white paper, "The Generosity Effect: Advisor Engagement in Charitable Giving Among High-Net-Worth and Affluent Investors,” which finds that charitable giving planning can strengthen advisor and client relationships.

According to the study, 76% of investor respondents indicated they want philanthropic guidance from their financial advisor, but only 36% said they receive it. This signals a significant opportunity for deeper engagement, the study pointed out. Further, among investors who receive charitable giving support, advisor satisfaction is strikingly high – as 87% reported higher satisfaction with their advisors, and the majority reported higher trust and loyalty.

The research summarizes qualitative and quantitative results from a national survey of 100 financial advisors, and more than 500 high-net-worth investors and high-income investors. The results, the report said, shed light on how charitable giving motivations, behaviors and unmet expectations are shaping the modern advice relationship.

Opportunities for advisors

Among the survey’s insights:

• Advisors who proactively engage clients on charitable giving reported tangible business benefits: 67% saw enhanced trust among clients, 54% experience improved client retention, and 32% uncovered hidden assets among clients as a direct result of their work with clients on charitable giving.
• Younger high net worth investors (ages 25-49) stand out as the most purpose-driven and receptive to philanthropic guidance: 75% want their advisor to bring up charitable giving, and the vast majority said that their family is very likely to stay with an advisor who raises the topic of charitable giving in their engagements.
• Sixty-one percent of investors surveyed lack a consistently applied, formal, and structured process in their giving. Most still handle charitable decisions independently or through other professionals such as accountants or attorneys. This indicates an opportunity for greater advisor-client engagement.

 

Benefits of proactively engaging clients in charitable giving

What are some of the benefits for advisors who proactively engage their clients in charitable giving?

“When advisors proactively engage clients on charitable giving, they move the relationship beyond transactions to more purpose-driven planning,” said Emily Barczak, insights director, T. Rowe Price U.S. Intermediaries Advisor Engagement. These conversations, she added, help advisors better understand clients’ values, family priorities and legacy goals, which can lead to more personalized advice and a more coordinated approach to taxes, estate strategy and broader wealth planning.

There is also a particularly compelling engagement opportunity with high net worth investors and those who are on the path to becoming high net worth, Barczak added.

“Our research shows younger wealthy investors are especially open to guidance,” she said, “and the broader study also included younger high-income investors who are still building wealth, shaping financial identities and establishing advisory relationships. For advisors, that makes charitable planning an important way to demonstrate relevance early, deepen trust over time and differentiate their value in a competitive marketplace.”

In explaining how charitable giving can strengthen the advisor/client relationship, Barczak said that charitable giving shifts the relationship from performance-focused to purpose-driven, creating more meaningful and trust-based conversations. When advisors help clients articulate not just how they give, but why they give, they show a genuine interest in the client’s values, aspirations, and long-term goals.

“That,” she said, “can deepen loyalty, strengthen multigenerational engagement, and position the advisor as a long-term partner through major life transitions. Over time, those conversations can make the relationship more personal, resilient, and enduring.”

Helping clients gain clarity and purpose

The first step advisors can take to help their clients gain clarity in their purpose for giving and for creating an effective giving plan is by asking thoughtful, open-ended questions that help clients articulate why they give, and the impact they want to make, Barczak said.

“That matters because our research found that charitable planning conversations aren’t happening as they should,” she added. “About one in five investors who don’t work with their advisor on charitable planning told us their advisor has never brought it up,” Barczak said. “On top of that, 35% of advised investors prefer their advisor to proactively raise the topic, and 61% of investors do not follow a defined giving strategy as part of their annual financial planning.”

Unstructured giving, Barczak added, “may mean missed tax efficiencies, missed coordination opportunities, fragmented decision-making, and less money to the causes being supported. This is a huge opportunity for advisors who can help bring structure to that process by aligning charitable goals with the broader financial plan, identifying planning opportunities, and revisiting the strategy over time as clients’ priorities and circumstances evolve.”

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