How to get Advisors on Board

Getting Advisors on Board

An Interview with Cole Eason

by Patrick O’Donnell, Editor, PlannedGiving.com

Cole Eason, JD, is Vice President of Advancement at the Truman Heartland Community Foundation, where he works with donors and advisors to encourage philanthropic partnerships. Prior to joining Truman, he worked for two universities on major gifts and gift planning programs, and as an attorney focused on estate planning and elder law. We recently sat down and chatted with Cole about the ways in which financial, legal and tax advisors can help clients create tax-efficient charitable gift plans that achieve their client’s philanthropic goals while still allowing advisors to manage that client’s portfolio.

Q: There’s a perception among some fundraisers that financial advisors and charitable giving don’t mix. The thinking goes something like this: “Why would an advisor encourage their client to donate a large portfolio to charity, when doing so would mean that advisor ultimately loses the management fees on that portfolio?” What’s your take, given that you work with a community foundation that, ultimately, relies on exactly that type of gift strategy?

A: Financial advisors, as I see it, are in the business of giving good advice, and many times they’re the most trusted advisor a donor has. If financial advisors advise clients to partner with a community foundation, it’s a win for the donor, for charity, and for the advisor. Because when they partner with us, we will open an account with their firm and allow the advisor to manage the investments for the charitable funds their clients create. The gift stays in their portfolio—and we will allow for this beyond their client’s lifetime.


 

Q: In other words, advisors can actually play a big role in helping clients reach their philanthropic goals? 

A: Absolutely. The advisor is there to help the donor do charitable planning for the long-term, helping them chose the best securities to make gifts with and getting the timing just right for the donor to leverage the tax benefits of giving. The donor makes grants from their donor advised funds when it suits them to help the causes they care about. One of the things that leads a lot of donors to us is their advisors. In fact, we look at advisors as referral sources. Their clients are already motivated, so in a way, our job has already been done.


 

Q: How do you get advisors on board with the idea that partnering with a community foundation will be beneficial? 

A: Our message to advisors is: That client you have who has no heirs; that couple you advise that has no heirs and doesn’t really know what’s going to happen to this large estate they’ve created … those accounts are going to end up leaving your portfolio at some point. It’s really good advice for them to take a hard look at partnering with our community foundation to see what we can do, together, to plan a personal legacy for their client that serves those causes that are close to their hearts.

 

It's good advice for them to see what we can do, together, to plan a personal legacy for their client that serves those causes that are close to their hearts.

Q: What happens when an advisor partners with your foundation?

A: We open an account with that advisor and let the advisor keep that money in their portfolio—we become their client in that sense, because we’re the custodians for the dollars their clients donate. We’ll let that advisor manage that account alongside the client’s investment accounts during the client’s lifetime—and actually beyond a client’s lifetime if they’re planning to endow their fund as a scholarship, competitive grant program, or designated fund. They charge us the same amount they’re charging the client based on their fee schedules, and we’re fine with that. That’s something I don’t think a lot of people know—it’s certainly news to some advisors. It’s usually something advisors need to be shown by one of their mentors. Many times, their training didn’t include much about charitable planning strategy.


Q: What are some of the benefits to the advisor’s client—the donor—in these partnerships?

A: It is a complete win for the donor in that they get the convenience of being able to work with their advisor on charitable planning. When people are empowered in that way, they realize, ‘Hey, I can do some more sophisticated things!’ And what’s really nice is that I get to be a part of these conversations where donors are creating permanent charitable legacies. I work with a lot of people who never saw themselves as wealthy enough to make ‘that kind of gift.’ But they truly are able to make them — especially those that don’t have easily discernible heirs, and have been savers throughout their lives. It’s empowering for donors. There’s a ‘light bulb,’ and you can see it go off in their mind … when they realize they really can do something that’s extremely significant with the money they saved.


Q: How do these partnerships help charity, beyond the initial gift?

A: We find almost always a donor’s annual giving, and overall giving during their lifetime, goes up when they work with their financial advisors on their charitable giving. But we also find donors almost always plan to make an estate gift to their fund, and turn their fund into a permanent legacy. So, during their lifetime it’s a DAF, but then converts when they pass, and becomes an endowment at the foundation in their name. The endowment makes gifts to the charities they love, forever, based upon their instructions as well. And the endowment grows, because we invest it, so their giving will grow. 


Q: Isn’t that like setting up a private foundation? 

A: Yes. What’s nice is you can create a living grant program, and that’s very similar to what very wealthy people do when they create private foundations for themselves. However, private foundations are really expensive. They’re expensive to settle, they’re expensive to deal with, and they’re also very likely to be audited. The gospel I preach is if you’ve lived a modest life and saved money over time, you can create a legacy in partnership with the community foundation that’s very similar to what the extremely wealthy could create for themselves through a private foundation. Many of our donors will work to grow their Donor Advised Funds into personal legacies that are permanently endowed. When they do, it’s their financial advisor who plays a key role in growing their fund and ensuring success over time.

Category: Planned Giving Marketing

I work with a lot of people who never saw themselves as wealthy enough to make ‘that kind of gift’. 

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