[email protected]
NEW FEATURERecommendations: instantly provide options when goals are over or underfunded!

How the Charitable Giving Niche is Underserved by the Industry

How does charitable giving factor into wealth management? How can you help your clients pursue their charitable goals and earn great financial returns? Today’s guest has mastered helping clients balance their finances with their values—something that most financial advisors aren’t doing because they’re not taking the time to even understand their clients’ goals.

Ryan Fraser is a nationally known Planned Giving expert. His firm, Quiet Legacy, helps individuals incorporate their personal values into their financial planning experience. Ryan is a past president of the Estate Planner Council of London and a past chair of the Canadian Association of Gift Planners (CAGP) London Roundtable. He has served extensively in leadership positions on boards and committees of numerous not-for-profit organizations including the Brain Tumour Foundation of Canada, London Heritage Council, Trillium Plus Music and Letters and many others.

Listen in to hear what Ryan has to say about how his firm serves clients, how to balance personal values with financial returns, and what is most misunderstood about charitable giving.

What You’ll Learn in This Episode:

  • Why Ryan’s firm focuses so much effort on helping charities (3:15)
  • Niching down by purpose and outlook—rather than demographic (6:10)
  • Ryan’s top tools and strategies for prioritizing clients’ values (19:00)
  • The major challenge around balancing values with returns (29:00)
  • Why and how you should calculate the cost of serving your clients (39:50)
  • What people misunderstand about charitable giving (45:55)

Links and Resources:

Quiet Legacy Planning Group

Canadian Association of Gift Planners (CAGP)

CAGP Conference

Ted Talk: The Way We Think About Charity is Dead Wrong (Dan Pallotta)

Quotes by Ryan Fraser:

“Before we have the numbers conversation, we’ve had some really deep conversations about what are the motivating factors in their lives and what are the things in their past that led these values to be really strong for them.”

“The thought that the most important thing to a client wasn’t the return is not something our industry ever contemplates.”

“I like to joke that my underlying business plan is I don’t want to deal with jerks.”

For some time now, Ryan’s career has been partly in the not-for-profit world and partly in financial services. His current practice, Quiet Legacy, is the perfect blend of the two: about 30% of his firm’s time is spent working with charities, including audits of their charitably owned life insurance policies, and talks on planned giving for their donors amongst other services. The other 70% is helping individuals with wealth management, insurance and financial planning.

Below, we’re sharing three key ideas from this episode:

    • Niching down by purpose and outlook, rather than demographic
    • Why Ryan’s niche is underserved by the industry—and what he’s doing about it
    • Two major misunderstandings about charitable giving

For the rest of the episode, find the podcast on iTunes or Stitcher, or hit the link above.

Niching down by purpose and outlook, rather than demographic

Quiet Legacy gets its name from the clientele the firm serves— the people Ryan calls the “quiet millionaires next door.” These are people who want to make charitable giving part of their financial and estate planning. They have saved up significant resources, live modestly, and are serious about sharing their wealth.

The obvious demographic here, of course, is the 60+ crowd. And they do make up a significant portion of Ryan’s clients.

But Ryan also works with a lot of professionals in their late 30s and early 40s. Like the 60-year-olds, they feel that the welfare of the world and the people around them is of utmost importance. And they’re people who want to act on these values.

And yet, these younger consumers have a hard time finding professionals who are willing to help them incorporate charity into their financial planning because they don’t fit the expected demographics for major charitable giving. Many advisors pick their niche around a certain age, marital status or career, so they’re ignoring clients who could otherwise be a great fit.

Ryan’s niche is based more around so-called tribal, or purpose-drive, marketing. He finds people with similar outlooks rather than similar physical or social characteristics, and he’s built his practice around them.

Why Ryan’s niche is underserved by the industryand what he’s doing about it

Another way in which Ryan’s niche is underserved is the assumption that returns are the most important thing to clients.

And sure, there are consumers who care most about returns. But for clients in Ryan’s target market, money is a tool, not the goal itself, and they want to use it according to their values.

Ryan recalls meeting one of his largest clients when she hired him for hourly fee-for-service planning. Early in Ryan’s conversation with her, it came up that she’s a stringent environmentalist and very concerned about the environmental impact of the oil industry.

Looking at her portfolio, however, Ryan noticed that 37% of her existing portfolio was invested in the oilsands. When he pointed this out, she immediately engaged Ryan to manage her assets. No one had ever bothered to discuss her values with her and show her how she can align her investments with them.

This is really a case in point for the importance of getting to know your clients and understanding what drives them.

Sure, it can be difficult to model a financial plan that makes use of various charitable strategies. And yes, your AUM may decrease when you help your clients give their money away. However, Ryan is confident that you easily make up for any additional effort or risk through the deep relationship you build with your clients when you help them use their money to reach their actual goals—not just a certain rate of return.

Hint: To hear more about charitable giving and estate planning, listen to How to Successfully Prevent Clients’ Biggest Mistakes around Estate Planning with Bill Green.

The major misunderstanding about charities’ expense ratios

A lot of people are concerned about charities’ expense ratios—and for good reason. A commonly cited truism states that no more than 25% of a charity’s expenses should be in administration, with the rest directly spent on delivering services.

But Ryan has a more nuanced way of looking at this. First of all, a food bank is not the same thing as say, a not-for-profit museum or a hospital foundation, and they all have different expenses with different administrative needs. It’s not fair to compare them against each other.

Secondly, people seem to expect charities to do things that most successful businesses can’t do. According to Mark C. Tibergien and Rebecca Pomering in their book Practice Made Perfect, the most effective financial advisory practices have a 44% profit margin; when you hit around that point, there’s not much you can do to optimize beyond it.

A 25% expense ratio is a 300% profit margin. If we expect a 44% profit margin from financial service professionals, why do we expect a 300% profit margin for charities? We expect businesses to make investments to increase revenue, but balk when charities do the same. However, if investing more in staff can make a charity reach more donors, raise more money and provide more services, why shouldn’t they do it?

If a charity has an expense ratio similar to, or ideally slightly lower than, other similar organizations, it’s a sign they’re likely on the right track, no matter what that exact ratio is.

Hint: Watch out for charities with unusually low expense ratios, too. It might mean that they’re underpaying and overworking their staff, which your clients probably don’t want to support.

For more advice from Ryan, make sure you catch the full episode where he covers topics like his methods for uncovering clients’ values and why it’s critical to calculate the cost of serving a client (plus how to do it). You can find the show right here on this page or subscribe on iTunes or Stitcher so you don’t miss any episodes.

And to get new episodes directly to your inbox, sign up for our mailing list below.