Wealth Management & Philanthropy

This article appears in the November issue of Wealth Manager magazine. It chronicles the way that I think the wealth management industry is currently underserving their clients when it comes to philanthropy and social investing.

The Next Wave: Part Three
By Sean Stannard-Stockton
Originally Appeared: Wealth Manager Magazine, November 2008

This is Part 3 of 3. Please read part 1 and part 2.

The world of traditional finance is mature and well mapped. Clients do not expect their lawyer to file their taxes nor their CPA to provide legal advice. The finance discipline has been sliced and diced into numerous areas of expertise and for the most part, clients understand the role of each advisor and can identify their own needs and match them to the appropriate advisor. To the extent that clients need help identifying domain experts, they are accustomed to their wealth advisor helping them navigate the map of financial service providers. Within philanthropy and the world of social investing, this map has yet to be drawn.

To whom will your clients turn for advice on which philanthropic vehicle to create? Who will help a client family define its philanthropic mission statement? Who will analyze the financial characteristics of a MRI opportunity? Will the same person consider the social implications of such an investment? Philanthropy is still an immature industry. Philanthropy-minded clients need a concierge who understands the philanthropic landscape and can point them to the appropriate people and resources.

Just as a traditional client might ask their wealth manager for assistance in evaluating a mortgage or learning more about alternative investments, philanthropic clients’ needs are not limited to the management of their investment portfolio. The wealth manager who strives to become a philanthropic concierge must build a broad network of contacts within philanthropy and know where to turn when their client asks for help.

Philanthropic investing has another characteristic that makes the role of philanthropic concierge even more important than its counterpart in traditional wealth management. In philanthropy, the social return that giving creates accrues to society at large and not just to the individual client. This means that true philanthropic concierges will benefit their clients by connecting them with similar clients and be able to identify co-funding or collaborative opportunities across their client base and ultimately throughout the philanthropic ecosystem.

The Second Great Wave of Philanthropy is going to transform both wealth management and traditional philanthropy. We must be aware that as much as financial professionals can add tremendous value to philanthropic clients, philanthropy requires much more than business knowledge. Wealth managers who recognize the value they can provide to philanthropic clients will discover a whole new frontier to explore. Like any frontier, the landscape is difficult, but the adventure is worth it.

This is Part 3 of 3. Please read part 1 and part 2.