Female philanthropists: challenges and chances for growth for advisors

 

The continued rise in high-net-worth women will have significant repercussions for the work of wealth advisors. One area where the effect is likely to be particularly profound is philanthropy. Aurelia Kassatly, Senior Private Client Manager at CAF, explores how advisors can better meet the philanthropy needs of their female clients.

The continued, rapid rise in high-net-worth women – with one estimate suggesting that $81 trillion will be in female hands globally by 2023 ­– will have significant repercussions for the work of advisors. One area where the effect is likely to be particularly profound is philanthropy.

Studies have shown that women are more generous than men, so the ability of wealth managers, accountants, tax specialists and lawyers to provide authoritative giving advice will become increasingly valuable, attracting new clients. But, for many advisors, making the most of this opportunity will require a substantial and rapid change of approach.

Prudence pays

Though there are numerous exceptions on both sides, would-be female philanthropists tend to be a little more cautious than their male counterparts. They want to really investigate a cause to make sure it’s something they can connect with and have a specific impact on before making donations. They are careful not to overstretch themselves financially, too. Men are generally less circumspect. We've noticed that some of our male clients may give money to charities based on peer-to-peer recommendations from friends or business associates. They also often give to a larger range of causes.

So advisors need to adjust to this different mindset when working with female HNWI clients. They need to be prepared to provide in-depth information on projects, and build in time to ensure that their clients are fully confident that their goals are both attainable and affordable.

Women also tend to prefer making long-term financial commitments to charities rather than the one-off donations generally favoured by male donors. They are more inclined to develop a deep attachment to a project and hopefully see it through to a successful outcome – such as the reconstruction of communities after natural disasters. Advisors must, in turn, dedicate the necessary time to these relationships with frequent, detailed updates on how a client’s money is improving a particular orphanage, say, or the outlook of a group of families.

Wealth management has traditionally been something of a boy’s club, so advisors might need to revisit how they work with their female clients. Cricket and golf chat are unlikely to advance the appropriate professional rapport and firms likely need to consider bringing in more female advisors.

Different outlooks

Many advisors will need to expand their knowledge of certain causes, if they are to successfully advise the growing numbers of female donors. Prominent HNW female philanthropists, such as Melinda Gates and the Women Moving Millions organisation, have ploughed tens of millions of pounds into projects improving the lives of women and girls. Many other women are following suit, so advisors need to become well versed in gender issues, ranging from maternal health to domestic-violence charities. Causes such as child development, family wellbeing and health also tend to be important to women.

Advisors must be mindful that increasing numbers of younger women, particularly, are keen that charities are representative of the people they are helping. Closely involving local communities in infrastructure projects, for instance, or having suitably ethnically diverse leadership teams.

Many wealth managers are turning their attention towards impact investments, such as renewable-energy projects, where sustainability or social benefits are as important as financial returns. This is another area that appeals to many women and is likely to grow substantially.

Tailored, practical solutions

With women keen to ensure that their philanthropy is as impactful but financially responsible as possible, advisors must ensure they provide them with a wide selection of workable giving strategies. Tried-and-tested philanthropy-management routes will not necessarily be the best fit and alternative solutions might suit their client better.

A family trust may be a good option for some, as female philanthropists tend to like involving their children in charitable projects, perhaps to teach them altruistic or civic-minded values. Other women may prefer the administrative ease and potential cost-savings of a donor-advised fund, such as CAF’s Charitable Trust. Women are also often drawn to collective philanthropy and giving circles like the female-driven international network Philanos.

When clients are looking to create a deep, enduring bond with a charity or cause, reducing tax liabilities may not be the major priority that it is in other financial planning decisions. Advisors need to be flexible here and realise that it is unlikely that the option which reduces liabilities but limits philanthropic impact will emerge as the client’s favourite choice.

The need for collaboration

Firms may find that establishing or significantly improving an in-house philanthropic service is a good solution for them and their clients. But working with outside specialist philanthropy advisors will often be particularly beneficial. Organisations such as CAF have considerable experience of finding the best philanthropy model for individuals. They can organise seemingly complex giving arrangements, such as donating to a US project while living in the UK in the most efficient way possible. They often have access to a huge network of charitable initiatives, making it easier to find the perfect fit for your female client, along with resources to help them improve their giving strategy.

Benefits to advisors

Creating an offering that is more appealing to would-be HNW female philanthropists is, of course, likely to lead directly to more clients and income for an advisor.

But helping a client combat today’s headline problems such as the climate emergency or gender inequality can also add to a firm’s  progressive outlook and has the further potential to draw in a new generation of HNWIs.

An advisor and female client who discuss at length what causes really matter to her when devising a giving strategy are likely to have a stronger, more personal bond. This makes her much less likely to move to another company. If children are involved in the charity discussions, the sense of trust this builds with a firm can lead to a partnership that spans the decades.

Above all, helping a client create substantial positive change in the world is one of the most satisfying things a wealth advisor can do. It’s a chance to be part of leaving a lasting imprint on society. To make money work not just for a few individuals, but possibly millions of people.

With thanks to Andrea Solana, Head of Advanced Planning at MASECO Private Wealth, for her support with this article.

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