POOR MAY BE WITH US, BUT PLANNERS NOT WITH THEM: PRO BONUS BEATS PRO BONO

Lawyers have Legal Aid. Physicians have Doctors without Borders. Even accountants have been known to give in to an occasional philanthropic urge.

What about financial advisers? So far, the industry’s pro bono record has been as poor as the folks it all but ignores.

There is no national network with a catchy name to promote or even facilitate charitable work among financial advisers. Public service, certainly, exists, but it is episodic and tends to focus more on potential clients than on the truly needy.

Local associations rack up their community service points by running marketing drives thinly disguised as free seminars on financial planning. Many advisers even count serving on the board of a client’s pet non-profit, or spending a few hours with a client’s poor(er) relations, as their good deeds.

Overlooked, oddly but often, is perhaps the profession’s most natural audience: the very poor. Families who, in increasing numbers, are being pushed by state governments to get off the dole, get jobs, get out of debt and start saving for the future. To embrace, in short, the same financial responsibility the planning industry has made it its mission to preach to the masses.

But for the first time, there are signs that some in the industry are getting serious about giving back.

The recently revived Foundation for Financial Planning in Atlanta is nearing completion of a $10 million endowment drive and has already made several grants.

The National Endowment for Financial Education in Englewood, Colo., is forming relationships with such social service groups as Habitat for Humanity, the Urban League and Share Our Strength.

not entirely altruistic

At the local level, several independent groups are developing ways to deliver free or low-cost planning for the low-income people who desperately need it.

Of course, the trend is not entirely altruistic: Many in the industry embrace the move as an essential part of an evolution from its unseemly roots in limited-partnership peddling.

“This surge in philanthropy is a new thing,” says Donald R. Pitti, chairman emeritus of the Foundation for Financial Planning. (Mr. Pitti also is a special consultant to InvestmentNews). “It’s inspired by the fact that financial planning wants to be recognized as a profession, and one of the hallmarks of a profession is pro bono work.”

The industry’s poor record on the public service front is largely a function of its youth, defenders say. Only in the past 10 years has the registered investment adviser community begun to jell, developing the kind of institutional deep pockets — not to mention image-consciousness — that promote good deeds.

“It’s a sign of our immaturity,” says Eric Lansky, a vice president at Nomura Research and Asset Management who’s forming Planners Without Minimums, a network to match pro bono planners with social service agencies.

The hope is that a more-established — not to mention bull-market-flush — investment community will find the time to turn toward its social conscience.

“With all of the national focus on welfare-to-work programs and financial responsibility for low-income families, there is a perfect opportunity for financial planners to get involved,” asserts Brent Neiser, the national endowment’s director of collaborative programs.

John Weiler, program director at the Corporation for Supportive Housing, a New York non-profit that helps people on public assistance find housing and jobs, couldn’t agree more. “These people face a whole new set of challenges. In some cases they go from budgeting a small welfare check or food stamps to dealing with things like setting up a bank account, direct deposit, retirement plans, even stock options.”

Planners also could help educate new earners about such potentially complex issues as tax obligations and earned-income tax credits.

“The need is certainly there — more than ever,” says Mr. Weiler, who has had early discussions with Mr. Lansky’s incipient group but so far has seen little help from the financial planning community.

Reaching out to the poorest families can be harder than it seems. The Foundation for Financial Planning’s one grant directly targeted at low-income populations — a $20,000 award to the University of California Davis to set up a community financial planning center — is on hold for political reasons at the university, according to Mr. Pitti.

Also stalled is a Certified Financial Planner Board of Standards offer to help New York City public assistance recipients learn about financial planning — a pledge which grew out of the board’s horror at the city’s decision to call its welfare caseworkers financial planners (InvestmentNews, May 24).

The national endowment’s plans to work with national non-profit organizations to develop financial planning materials to assist the welfare-to-work transition also are still on the drawing board.

Meanwhile, the major advisory firms and brokerages have provided little direction. All have come to recognize community service as an important part of building trust and brand, and all say they actively encourage volunteerism. But most leave the onus at the local level.

a scattershot pattern

“We really feel our people in the local communities know best what the needs are, and our job is to support them,” says a spokeswoman for American Express Co.

The result, often, is a well-intended but scattershot pattern of community outreach that ranges from hurricane support drives at Merrill Lynch & Co. Inc. to an American Express effort to help elderly consumers avoid telefraud to — some — financial planning.

“We do a lot of different things in different communities, but our philanthropy is not focused, in a specific way, on financial planning,” explains a Charles Schwab Corp. spokesman.

Independent planners seem to focus more on donating their expertise. Many, like Martin Thurman of Wichita, Kan., come by pro bono clients at church, the Rotary Club or through their kids’ little leagues.

Mr. Thurman says he donates a few hours each month, helping families who have little or no savings with budgeting and debt consolidation. He also encourages families to set up emergency savings accounts, get rid of cable TV if they can’t afford it and, most important, watch out for credit cards.

“I tell them to put a Band-Aid — literally — on their credit cards,” says Mr. Thurman. “That way, the minute it takes to peel that Band-Aid off is another minute to think about whether you need that new pair of shoes or rod and reel.”

Sam Hull of Northstar Financial Planning in Bedford, N.H., gets most of his pro bono clients through referrals from other planners who say they don’t have the time to spare.

In one case, an elderly woman who had been scammed out of her $400,000 inheritance was about to lose her house. Mr. Hull helped her get a tax abatement to keep the house, assisted her in dealing with authorities to try to get some of the money back, and eventually invested what was left in a few index and growth mutual funds.

“Mostly, though, it’s really basic stuff,” says Mr. Hull, who regularly spends a few hours each month with pro bono clients. “Cash flow. Credit. Saving and spending. It’s all about discipline, no matter how much money you have or don’t have.”

Sacramento, Calif., planner Pamela Christensen agrees. She spends 20% of her time counseling clients who pay her little or nothing, and hopes to form a nonprofit organization to provide financial planning for low-income families.

The first meeting covers budgeting and cash flow. Credit cards and checking accounts come next. Successful clients sometimes return for help with health care, insurance and even investment help.

“Poor people need the same thing most of my regular clients need: someone looking over their shoulder,” says Ms. Christensen.

Larry Waschka of Waschka Capital Investments in Little Rock, Ark., says they also need dreams: “Even people who can only put away $50 a month — or heck, even $5 — need to know about the beauty of compound interest, the concept of building wealth.”

Mr. Waschka and several colleagues are forming a financial planning firm — separate from their regular high-net-worth practices — that will focus on clients with as little as $1,000. Mr. Waschka, who has done pro bono work for years, wants to charge those who can afford it a flat fee for consultations, but expects 30% of the business to be pro bono.

“Do I think you can make money in this market? You bet,” he says. “Do I also think it’s important to do something that isn’t about just making money? You bet. What goes around comes around.”

Ms. Christensen seconds the motion. “I know it’s a cliche. But it makes you feel good. It really does.”

If it also helps planners build trust and brand recognition in their communities, so much the better.