The Great Wealth Transfer is our opportunity to do things differently

This article was published in the NZ Law Society Magazine Property Law, August 2024. It is reproduced with permission.

Recent research in the UK shows how crucial professional advisors are in growing philanthropy. Eleanor Cater writes of some of the findings from this research.

Professional advisors, including lawyers and accountants, are the most trusted advisors to people with wealth. They hold a very special position of influence and are often intimately involved in helping clients preserve and grow their wealth, plan for the end of life and develop estate plans. However, while professional advisor education focuses on strategies to maintain and growth wealth what is not covered one of human’s innate desires – how to do good by giving money away well. Professional advisors reveal that they often lack the tools and can often lack the confidence to bring up this crucial conversation, even though it has been shown by research as a topic which sits close to the hearts of many clients and one that they will to embrace.

More than 100 years ago Andrew Carnegie, American philanthropist, sagely observed that “it’s more difficult to give money away intelligently than to earn it in the first place”. Not much has changed in the following century and Kiwis face a modern paradox of wanting to do good but not knowing how; there are a vast array of causes and giving vehicles and sometime the confusing landscape can lead to inaction due to the sheer complexity of options.

The good news is that professional advice can be incredibly enabling in the philanthropy space; professional advisors can help their clients to discover something quite extraordinary, about themselves and how to go about giving well. Community foundations – 18 of them around New Zealand - can work in partnership with professional advisors, boosting their philanthropic expertise and helping clients discover their philanthropy or giving ‘sweet spot’.

In the UK, where I travelled in 2023 with a Winston Churchill Fellowship, I discovered that the majority of the UK’s 47 community foundations have close relationships with professional advisor networks and there is a very active conversation going on with a nationwide campaign – Remember A Charity - to grow bequests to charity. As a result, legacy giving has risen by 43% over 10 years, and almost quarter (24%) of wills handled by UK legal advisors including a gift to charity, showing steady growth and long-term change over the past decade (up from 16% in 2014)[2].

This more advanced philanthropy ecosystem in the UK provides us with a good roadmap and an opportunity to do things differently here in New Zealand. The Great Wealth Transfer of the baby boomers, which is sitting on our doorstep, and the deep needs of our communities, provides us with our ‘why’.

However, this is not the only ‘why’ at work. Professional advisors often describe ‘the philanthropy conversation’ as some of the most satisfying conversations of their careers. This is the opportunity to deeply discuss the things that really matter to their clients and to help them discover themselves as changemakers.

The philanthropy conversation can start as simply as:

• What do you care about?
• Have you volunteered or, is there a cause you are particularly passionate about?
• What legacy do you want to leave the world?
• Do you want to involve your family in shaping your giving plans?
• Have you ever thought of making change happen through leaving a gift in your will? (It’s something other people do[3]).
• How do you want to be remembered?

These conversations, utilizing human skills and high EQ, touch on some of the deepest matters of importance to clients, driving loyalty and intergenerational relationships between clients and professional advisors. One study even showed that up to 40% of the next generation are more likely to stay with the family’s advisor if they have helped to shape the family’s philanthropy[4].

Additionally, what may surprise you, is the joy that philanthropy brings to people, described as a ‘warm glow’ from giving, it’s a researched phenomenon that might seem a little curious, however is absolutely real: people really do get great joy from giving, whether during their lifetime or by leaving a gift in their will. This may be linked with shaping their identity, during their lifetime and beyond, changing the way that your clients see themselves and providing the empowerment people need to do something extraordinary.

In sociology, field theory tells us that fields of expertise are constantly evolving, and this is certainly true of philanthropy advising as a growing area of expertise. It is widely recognized that the growth of philanthropy advice sits firmly in the sphere of influence of professional advisors and, perhaps the Great Wealth Transfer is the opportunity for professional advisors to do things a little differently.

My suggestion is to make the philanthropy conversation a part of financial conversations and estate planning; it may not appeal to all of your clients, but research tells us that it will appeal to many who may just discover that they can be the changemakers that their communities need. I am certain that many of your clients will thank you for helping them step onto that journey of discovery of how to give their money away well.

Eleanor Cater is Philanthropy and Membership Services Director with Community Foundations of Aotearoa NZ and has recently completed a Masters in Philanthropic Studies through the University of Kent’s Centre for Philanthropy, her dissertation studying the practice of philanthropy advising in New Zealand.

Download the pdf of this article from the Property Lawyer Magazine here - Property Lawyer Article August 2024

[2] https://www.rememberacharity.org.uk/about-us/latest-news/one-in-four-professionally-written-wills-now-include-a-charitable-gift/

[3] Research from the University of Bristol and Remember a Charity shows that social norm framing is important in this conversation - https://www.bi.team/publications/legacy-giving-and-behavioural-insights/

[4] https://www.wealthprofessional.ca/investments/wealth-technology/a-case-for-sophistication-in-philanthropy-plans/386201