Advisers not confident in guiding charitable dollars

In a white paper to be released today, Schwab Charitable of San Francisco and Penton Media Inc. of New York found that nearly eight of 10 advisers talked to their clients about charitable giving. But 37% of the 318 advisers surveyed said they had doubts about their philanthropic expertise.

Twenty-two percent said clients didn't expect to receive advice on charitable giving from advisers, and that "it would feel presumptuous to initiate the conversation." But 69% differed in their approach, saying that they were the ones who initiated the discussion with their clients.

In total, 79% of advisers discussed charitable giving with their clients, the survey found. Just 5% said that they talked about charitable giving with all clients.

It was the first survey of its kind by Schwab Charitable, formerly the Schwab Fund for Charitable Giving.

Kim Wright-Violich: Advisers need education on charitable investing.

"It's still reactive," she said. "One third said it was the clients who brought it up."

Some advisers are simply not comfortable discussing charitable giving, Ms. Wright-Violich said.

"They are being asked to develop expertise in a variety of areas, not just stocks or mutual funds," she added. "They are being asked to have some level of expertise about taxation, second-home planning, legacy planning and how to involve the family."

The report found that some advisers felt uncomfortable discussing charitable giving, with 40% citing a sense of "awkwardness" or "inappropriateness" about having a discussion on the subject. Eight percent were worried about "whether they would offend their client," and 10% said charitable giving was "too personal and values based."

Fees related to advice about charitable giving didn't rank high among adviser concerns. More than half of the survey's respondents said they didn't get paid for offering advice in the charitable arena.

A very small number of advisers — 3% of those surveyed — said they didn't get paid enough to discuss charitable giving with their clients, while 8% said that having a way to charge for such a discussion would motivate them to increase the frequency of those conversations.

"Most advisers don't know how to charge for that time," said Barry Glassman, a financial planner with Cassaday & Co. Inc. of McLean, Va. "Some don't want to talk to their clients, because it means giving money away that they would otherwise manage."

Philanthropic planning is popular — last year, Americans gave $295 billion directly to charitable causes, according to Glenview, Ill.-based Giving USA's Annual Report on Philanthropy.

But like financial planning, it requires a process, Mr. Glassman said.

"Instead of finding the charity first, come up with the mission first and then find the charity that fits," he said. "I believe people should take a step back and talk about where the individual's passion lies."

Whether to delve into a client's philanthropic goals is a matter of debate among advisers, said F. John Deyeso, a planner with New York-based financial filosophy.

"I think there is some trepidation among some advisers," he said. "They are afraid that if they bring it up, and the client isn't philanthropic, the client will feel as if the adviser is passing judgment on them."

The idea that giving assets away lowers assets under management also may be holding some advisers back, Mr. Deyeso said.

Noting that many advisers are worried about their level of expertise in steering clients' charitable dollars, Ms. Wright-Violich suggested that many advisers are probably skimming the surface when it comes to discussing philanthropic planning with clients. "I would suspect that the conversations are pretty superficial," she said.

Education is a primary issue, Ms. Wright-Violich said. About 47% of the survey's respondents said they would have more discussions about charitable giving with their clients if they received more education and training.

"They don't have to be a deep expert," Ms. Wright-Violich said. "They can develop a bench of experts to call on."

Sue Asci can be reached at sasci@crain.com.