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Philanthropic knowledge ‘can help wealth managers boost AUM’

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Philanthropic knowledge, recommendations and guidance around private foundations and donor-advised funds (DAFs) can help wealth managers increase their assets under management (AUM), according to a survey by Foundation Source.

The survey found that it is more common for respondents to manage the assets of their clients’ private foundations than those in their clients’ DAFs: 44 per cent said they manage the assets for more than half of their clients with private foundations, but only 21 per cent manage the same proportion of their clients’ DAFs.
 
The survey also found that respondents generally perceive their clients as charitable and have incorporated philanthropy into their practices. Ninety-seven per cent said they discuss philanthropy with their clients, and 66 per cent said they do so “often” or “at most every client meeting.” Moreover, 87 per cent said these conversations have enabled them to meet their clients’ spouses and families.
 
“Conversations around philanthropy can yield more than just introductions,” says Foundation Source chief distribution officer Joseph Fuschillo. “Whether advisers manage those assets seems to be correlated to who came up with the idea initially, the client or the advisor.”
 
Fifty-seven per cent of advisers who said they originated the idea of a private foundation also manage those assets, and 29 per cent of wealth managers who originated the idea of starting a donor-advised fund also reported that they manage the assets in those accounts.
 
Although the likelihood of managing the assets in the client’s charitable vehicle was greater with a private foundation, respondents were nearly twice as likely to proactively recommend a DAF (60 per cent) to their clients compared to a private foundation (32 per cent). This finding is striking when one considers the potential difference in asset size between the two vehicles. As reported by 2015 IRS data, the average size of a private foundation is USD5 million whereas National Philanthropic Trust reported that the average size of a DAF account currently stands at USD292,000.

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