Investing

True wealth realized by pursuing passions

Building wealth beyond dollars for clients is more challenging and gratifying than peppering their holdings with the latest hot stock pick or designing a soundly diversified portfolio.

Indeed, helping them discover true wealth lies first and foremost in your ability to uncover their deepest passions — and then in providing the insights, knowledge and financial prowess to build a philanthropic road map.

“Philanthropy” is derived from the Greek word meaning “love for mankind.” As a philanthropic adviser, you may help clients articulate, perhaps for the first time, their deepest values and concerns. The approach is endearing and might solidify your relationship with them.

Such discussions often pull in family members across the generations. More than 70% of high-net-worth households discuss their philanthropic plans with their children, with 50% of those allowing family members to participate in the decision making, according to the Center on Wealth and Philanthropy of Chestnut Hill, Mass. Clearly, engaging in philanthropic consulting provides the opportunity to tie a financial practice to families’ long-term financial strategies.

Beyond the acts of kindness, there are tangible rewards: Planners who included philanthropy as a major component of their planning process made, on average, up to five times more in ancillary business than their product-oriented peers during the first year in which planned giving was broached with clients, according to research conducted for Merrill Lynch & Co. Inc. of New York by Prince & Associates of Dallas. In addition, philanthropic planners received an average of 12.9 unsolicited client referrals for every 100 clients, as opposed to 0.8 referrals for advisers who did not discuss philanthropy with clients. By 2055, as Americans pass on an estimated $41 trillion of accumulated assets to the next generation, more than a million charities will benefit.

Putting aside the obvious tax benefits of charitable giving, there are as many reasons for giving as there are charitable organizations to support them. And each client has experienced life differently. Some credit their success to a remarkable high school experience. Others beat cancer. Still others have worked at a soup kitchen with their church group.

At Narsad, our donors often are motivated to support psychiatric research because their own families and friends have suffered from psychiatric problems. Some remember a son or daughter who became addicted to drugs. Others were unable to stop a sibling with severe anxiety from committing suicide. Still others watched a family fall apart after one of its members returned from military service suffering from post-traumatic stress disorder.

But before advisers can know whether compassion for the homeless, the wish to advance medical research or a desire to sustain the arts motivates a client, they must probe, listen, restate and summarize.

Probe: The key is to keep questions short and simple. Ask clients: What experiences have truly moved them? When have they been inspired? Where have they volunteered? If they had no responsibilities, how would they spend their time?

With each answer, probe further by encouraging comments such as: “How so?” or, “Tell me more.” Advisers should be careful to withhold judgment and not jump in with a story of their own.

Listen. Pay attention not only to the stated answers but, more importantly, to the underlying emotions. Watch for enthusiasm, joy, sorrow or anger — emotions that may be reflected in body language and communicated through heightened animation.

Restate. Help clients evaluate their personal investment in their experiences by restating what they said. Be sure to give feedback on their demeanor as the stories unfold.

Summarize. Once it has been determined where a client’s interests, values and expectations connect, ask what result the client would most like to see from their gift. Encourage answers that are as noble and far-reaching as possible.

Charities will discuss their priorities with advisers. Research those that can affect your clients’ noble goals by consulting the National Philanthropic Trust of Jenkintown, Pa., and the BBB Wise Giving Alliance of Arlington, Va.

By leading clients through the transformation of a fuzzy “feel good” concept into concrete philanthropic action, advisers become trusted partners who understand the emotional satisfaction of creating a legacy.

Geoff Birkett is president of Narsad in Great Neck, N.Y., a charity that raises funds for severe psychiatric and behavior disorders.