Demand For Philanthropy Advice Grows, Still Shortcomings

Rachel Walsh 15 October 2008

Demand For Philanthropy Advice Grows, Still Shortcomings

Philanthropic investment advice is in demand and will be a core service required of wealth advisors, according to a report commissioned by New Philanthropy Capital, a charity offering investment advice.

Wealth managers need more training in this area but the benefits are considerable, such as new and increasing sources of revenue, strong client relationships and new clients from referrals, the report said.

The report, produced for NPC by wealth management consultancy Scorpio Partnership, says that owing to increased client demand more advisors are offering philanthropy services to their clients. But the lack of training means the range of services is limited and many donors are unaware of the advice available.

The research was based on interviews with 100 private client advisors across Europe, including private banks, multi-family offices, trustees, private client lawyers and accountants, and other specialist wealth advisors.

Plum Lomax, NPC spokesperson, said: “This report provides a clear view from across the market that the importance of philanthropy in the wealth advisory process will continue to grow throughout Europe. Sixty per cent of participants in the survey believed that philanthropy will become a core pillar of client services within five years.”

However, surveyed wealth advisors feel that they are not adequately trained to discuss philanthropy with their clients and hence offer advice on an informal, reactive basis. Only 50 per cent of the private banks interviewed felt their front-line teams are well trained in discussing philanthropy with their clients.

The report found that wealth advisors tend to focus their resources on the initial stages of giving, such as vehicle structuring and tax advice, rather than on helping clients select projects and monitor the impact of their giving. In addition, the report found growing demand for advisors to work with third party experts who can provide guidance on aspects of philanthropy outside advisors’ areas of expertise.

The report confirms the findings of a survey undertaken by Scorpio Research last year, which found that 90 per cent of ultra high net worth individuals interviewed recognised the need for expert advice on philanthropy, but did not believe that traditional wealth advisors met that need.

“The wealth management industry ignores these challenges at its peril. Despite the current economic downturn, factors such as rising wealth, fiscal change and a growing social conscience along with eagerness to see the impact of their donations will continue to fuel demand for philanthropy advice in the long term,” said Ms Lomax.

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