Your Wealthiest Clients May Not Have Their Estate Plans in Order
Wealthy and successful people may be highly capable in business, investing and fundraising. But that doesn’t mean they have their estate and giving plans in order. Sometimes, the bigger they are, the harder they’re likely to fall.
As an advisor, you shouldn’t be afraid to ask your A-list clients directly about their estate plans, succession plans and charitable intentions. You’d be surprised how often they’re not up to date or well thought out. Consider these stats: Even though 64% of wealthy individuals place a high value on the legacy they can pass on to the next generation, two in five (39%) don’t have a comprehensive estate plan, according to the U.S. Trust Insights on Wealth and Worth. Even among those in the $25 million-plus net worth cohort, a separate survey shows that one in six (16%) have no estate plan, will, or trust.
Those numbers may seem high to you, but I’m certain they’re not far off. For example, a couple in their mid-60s worth $55 million came to us last year. They have four adult children and a trust drafted 25 years ago, long before they amassed significant wealth. Both husband and wife were very charitable, serving as presidents of charitable boards, and both made significant charitable pledges. Their outdated estate plans made no provisions for charity, saved them nothing in taxes and distributed vast sums of money to their children outright. It was clearly in need of repair.
But their financial and wealth advisors never thought to ask them.
That’s a huge missed opportunity and all too common. According to a CEG Insights survey of 400 affluent investors, seven out of eight (87%) expressed a desire to make a meaningful impact through charitable activities. However, just 6% report receiving charitable planning advice from their advisors, according to CEG.
Five Mental Blocks
So, why are wealth advisors so reluctant to ask their wealthiest clients about estate plans and planned giving intentions? It comes down to five mental blocks:
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Competence anxiety & technical gaps: Many advisors fear looking uninformed in front of their most valuable clients.
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Perceived disintermediation and asset drainage risks: Bringing in experts from estate planning and planned giving can feel like a financial threat to the advisor’s firm. Also, they fear that if their clients give money to charity, they’ll lose assets to manage.
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Fear of navigating emotional taboos: Estate planning and planned giving are inherently tied to death, aging and deep family dynamics.
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Misconception of financial drivers: Advisors are trained to optimize numbers, which leads to a fundamental misunderstanding of why their ultra-high-net-worth (UHNW) clients give away their money. Research from The Philanthropic Initiative shows that over 40% of advisors assume tax reduction is the primary motivator for philanthropy. In reality, only 21% of UHNW clients say tax breaks are their main driver.
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Complexity vs. education: UHNW and high-net-worth assets are inherently complex (involving business continuity, trusts, real estate and multi-generational tax exposure). Many UHNW folks don’t understand the complex structures that their high-priced estate planning firm did for them years ago. They don’t want to appear naive.
Broaching the Subject of Philanthropy
As a seasoned advisor, you play a critical role in auditing clients’ existing documents, coordinating with their estate attorneys and tax professionals and asking the hard questions about asset control versus transfer.
Don’t overthink it. Simply bring up philanthropy as part of your regular process. Whether you do the work and review it yourself or refer it out, approach all financial advice as part of a comprehensive overview. It’s okay to admit you’re not the expert when it comes to advanced estate planning and charitable giving. Clients know that anyway. The key is to be genuinely interested and concerned about each client’s well-being.
Be the Quarterback
Because you likely interact with your clients more frequently throughout the year than any of their other advisors do, you’re in a unique position to position yourself as the quarterback of the advisor team. Offer to be the one who coordinates the efforts of their estate planners, tax advisors, insurance pros, bankers and planned giving officers. Clients are busy and distracted and don’t know what they don’t know. It’s a good time to be of service and add value to the relationship
I don’t buy the argument that there’s no money to be made by helping clients with their charitable planning and family dynamics. The trick is knowing how to use the tools available to your advantage. Charities Aid Foundation research shows that offering advice on philanthropy could increase client lifetime value by nearly 25% by 2035. Over ten years, firms providing philanthropic advice could see their assets under management grow by 15% more than those that don’t offer this service.
When I speak to advisors, the first thing I tell them is that without philanthropic planning, all their clients’ money goes to taxes. That means you have no opportunity to manage that money because the government is managing it. But if you do charitable planning for your clients, that money may end up in a donor-advised fund (DAF) or charitable trust. The DAF or trust may remain intact for many generations, allowing you to manage the client’s money nearly forever. With the right approach, you’re keeping more assets under management, not losing them, by incorporating charitable tools.
Sources of Training and Education
In addition to networking with other specialists in charitable planning, there have never been a better range of sources for training and certification. The American College’s CAP® program (Chartered Advisor in Philanthropy) is a good starting point for getting a foundation, as is the National Association of Charitable Gift Planners. The Advising for Impact Certificate Program run by the University of Pennsylvania’s Center for High Impact Philanthropy (CFP) offers family office executives and wealth managers frameworks for high-impact giving and CFP continuing education credits. Indiana University Lilly Family School of Philanthropy offers specialized training and certificate programs for financial and wealth advisors. You can often find regional philanthropic networking groups, such as the Planned Giving Group of New England,fornetworking, masterclasses and updates on regional charitable giving structures.
Take the first step as a 2027 goal. You’ll be glad you did.
