What financial adviser wouldn’t like to have a client who has a long-term investment horizon, strong connections to the community and a large account balance?
If that kind of client sounds good to you, consider marketing to foundations and endowments.
There are more than 660,000 foundations and endowments in the United States, with combined assets approaching $500 billion. While large foundations, such as those bearing the names Ford, Gates and Rockefeller, get much of the attention, most charitable foundations are small and not very well known.
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Eve Ellis, a senior financial adviser at Merrill Lynch & Co. Inc. in New York, works with several such philanthropic foundations. They include New Dramatists, a New York group that supports aspiring playwrights, and Metropolitan Community Churches, an ecumenical worldwide church group that promotes tolerance and inclusion.
“I help them manage and grow the endowments and the planned-giving assets,” Ms. Ellis said. “Increasing planned giving means talking to potential donors.”
Having been a professional tennis player and a coach for many years, she sees her role as another way to be an educator.
“After 9/11, I wanted to do something that would be more important in people’s lives — make a difference,” Ms. Ellis said. “An estate-
planning course really interested me, and it led to my working with philanthropies.”
After four years in the business, Ms. Ellis has a practice that is closing in on $100 million in assets under management.
She uses a combination of “contacts, referrals, new networking and old networking” to build her business. Ms. Ellis describes old networking as maintaining contact with existing clients and acquaintances, and getting to know them better.
In addition, those who influence boards — attorneys, bankers and accountants — may be able to make referrals. Another option is to join and become active, but this approach works best if you have a real commitment to the cause.
Serving on a board can add to your credibility. Ms. Ellis sits on the boards of the greater New York City affiliate of Susan G. Komen for the Cure, a Dallas breast cancer organization, as well as Maccabi USA/Sports for Israel in Philadelphia, which organizes a U.S. team to compete at the World Maccabiah Games in Israel every four years.
“I don’t manage their assets, because it would not be appropriate, but being a board member helps in getting business,” Ms. Ellis said.
While working with philanthropies offers personal and professional rewards, it also has its challenges.
“It’s not a quick business,” Ms. Ellis said. “But that’s OK, because I knew that going in.”
In some cases, the challenges can actually be opportunities. For example, many board members make assumptions about their organization: that its necessary financial oversight is in place, a bank is taking care of it, or a financial adviser is following the group’s investment policy.
Offering to take a look at the group’s investment policy can be a door opener, especially if it turns out that the organization doesn’t have one or has one that isn’t being followed. Board members also may not realize their level of fiduciary responsibility.
“Parts of it apply now, and more will become applicable,” she said. “People are a little scared of this, and they should be, but it’s an opportunity for an adviser.”
Many advisers start with small non-profits — those with $10 million or less. “Small groups may think they can function as individual investors, that they don’t need to be sophisticated, but this is not the case,” Ms. Ellis said.
She also pointed out that personality issues can get in the way.
“A strong leader may not let others participate, and it can be hard getting people to be open to a second opinion and receptive to change. There is often inertia on a board,” Ms. Ellis said.
Ms. Ellis, who is about to receive her certified investment management analyst designation, is already a certified financial planner and a chartered adviser in philanthropy.
“CAP helped me to further understand what board members do and what I can do to help them,” she said. Ms. Ellis also finds that Merrill Lynch’s Center for Philanthropy and its trust company are useful resources.
Independent advisers can find similar support from firms such as Charles Schwab & Co. Inc. of San Francisco and Fidelity Investments of Boston, which have philanthropy centers, and many mutual fund companies, which provide information and advice on marketing to foundations. There are also many independent trust companies that work with advisers.
Libby Dubick is president of Dubick & Associates Ltd., a New York firm that helps advisers and financial services firms identify and develop distribution and marketing opportunities.
