Wealth Transfer: Family Philanthropy as a Conversation
Your clients have a dream.
Longtime clients Jack and Sheri are also longtime animal lovers. Over the years, they’ve shared with you their dream of starting a dog rescue for senior canine citizens. As you’ve guided Jack and Sheri in making important decisions about their investment portfolio, you’ve also discussed how a portion of their wealth could be directed toward realizing their lifelong desire to help homeless older dogs.
But are Jack and Sheri’s children, Alex and Alyssa, clued in to their parents’ animal aspirations? And, just as important, do they support them?
Maybe. But more likely, maybe not. That’s because conversations about family wealth and its disposition following a triggering life event can be, well, uncomfortable.
Here’s your opportunity to demonstrate your concern—and your expertise. By bringing Jack and Sheri’s kids into the family conversation about philanthropic giving, you not only enhance your value in the eyes of the parents but also set the stage for developing a relationship with Alex and Alyssa, which could eventually lead them to sign on as clients as well. Considering that most heirs switch advisors after their parents pass, connecting early and often with potential second-generation clients could be the lifeblood of your practice.
A conversation starter
As a trusted advisor to a family, you can highlight the true value of your relationship by helping them prepare for the challenging decisions surrounding wealth transfer. While discussions about family wealth can be fraught with emotion, using philanthropy to start the dialogue may help diffuse tension and open the door to a meaningful exchange.
An annual family meeting offers an ideal opportunity to broach the subject of philanthropic giving. Prior to your inaugural meeting, which should include your couple clients and their children only, you should:
- Educate families on the importance of legacy conversations in ensuring a successful wealth transfer to the next generation. Your goal is to help them articulate their individual and shared goals for their wealth, as unique as those goals may be.
- Have each partner complete a questionnaire that probes for answers about family success stories, the family’s values and views about philanthropy and family giving.
- Discuss the couple’s responses in a follow-up meeting and use them as a basis for developing an agenda for the initial family meeting.
Aligning family values with giving
This first meeting provides a forum for parents to communicate information to the next generation—and for the next generation to ask questions about this information. You’ll want to facilitate family dialogue by encouraging the parents to share their success stories, which will highlight their family values. In turn, those family values will naturally lead to a conversation about how they can express their beliefs through philanthropic giving.
Discussing family philanthropy introduces the subject of wealth transfer in a way that will make talking about money more comfortable. It’s also a great tool for children to learn about finance and investing. To further engage their children, the parents may want to task them with identifying and researching some charitable organizations to consider supporting. At the next family meeting, family members can continue this conversation and decide where they may want to gift a small donation provided by the parents.
Preparing for the great wealth transfer
With your help, the family is on its way to bridging the wealth transfer communication gap. For more tips and tools on preparing your practice for the great wealth transfer, contact your Janus Henderson Sales Director at 800-668-0434
To read more, visit our Wealth Management resources.