The Lifecycle of a Private Client

Hello and welcome to the Philanthropy Impact podcast where we discuss all things philanthropy Hello and Happy New Year. Welcome to our first Walk in Majus of 2023, where we are bringing to life the theme of our recent magazine, The Life Cycle of a Private. My name is Zophia and I'm the moderator of this series for Philanthropy Impact Members. Originally created as a response to the lockdown of 2020, this series fast became a staple part of our membership.

The recordings are available online as a resource for professional advisors, for your clients, and also those wanting to create positive impact from across the world. Running just once a month now, rather than weekly, as it used to be, we will ensure the topics are relevant, informative, and solution focused for your clients. Following each session, we will create content from the discussions covered, including further events and articles.

Rydyn ni'n gwybod, mae'n gwybod, mae'n gwybod, mae'n gwybod, mae'n gwybod, mae'n gwybod, mae'n gwybod, mae'n gwybod, mae'n gwybod, mae'n gwybod, mae'n gwybod, mae'n gwybod, mae'n gwybod. My email will also be available at the end of the video for those watching the recording. And now all that's left for me to do is introduce our panelists for today. We're joined by some of our members and authors from our recent magazine and it's with great pleasure that

Darren Kelland, he's the global head of private client services at Portsford. Joining Darren, we welcome Who's the investment counsellor at Nedbank Private Wealth? Mark Greer, Managing Director of Philanthropy Services at Charities Aid Foundations, and Catherine DeMage, who's partner at Burgess. Thank you all for joining today and I will now hand over to Darren to make us start.

Thanks, Stephanie. Thank you, Sophia. Thank you for the introduction. So as Sophia said, I'm the head of private client uh services at Hoxford and I'm delighted to be joined by my three panellists, Rebecca, Mark and Catherine today. to explore in a bit more detail the life cycle of a private client. Uh previously each of the panelists have contributed to uh the Philanthropy Impact magazine with articles on the life cycle of a private client.

And I think for that reason it would be useful to start the ball rolling in relation to the role that we as professional advisors have to play have to play in the support of clients and their philanthropic journeys. So um as you may have already read in Catherine's article, she talks about the fact that the the first port of call for uh

client who needs philanthropic advice is normally a lawyer. So I'm going to turn to Catherine and say, can you expand upon that a little bit and explain how you develop the role in terms of the advice that you give to clients who need philanthropic advice? Sure, of course. So clients that come to me for philanthropy advice, it's often triggered by a liquidity event. So they've sometimes sold a business, hopefully for lots of money, or they've inherited a lot of wealth.

So they've essentially got more money than they potentially ever need for themselves and their families, so they start looking.

a'r hyn o'r hyn o'r hyn o'r hyn o'r hyn o'r hyn o'r hyn o'r hyn o'r hyn o'r hyn o'r hyn o'r hyn o'r hyn o'r hyn o'r hyn o'r hyn o'r hyn o'r hyn o'r hyn o'r hyn o'r hyn o'r hyn o'r hyn o'r hyn o'r hyn o'r hyn o'r hyn o'r hyn o'r hyn o'r hyn o'r hyn o'r hyn o'r hyn o'r hyn o'r hyn o'r hyn o'r hyn but I will certainly hold their hands and make the right introductions because I think as um

a philanthropy impact i wedi cael ei wneud before. A philanthropy advice is such a multi-disciplinary area that no one person is going to be able to provide absolutely all of the advice. I'll usually start with some some families come to me and they have a really clear idea on what their values are and where they want to make a difference and that's great. Rydyn ni'n ei wneud, rydyn ni'n ei wneud. Rydyn ni'n ei wneud. Rydyn ni'n ei wneud.

tend to be uh feel a bit overwhelmed about where to start and what to do. I try and break it down into sort of manageable bite-sized portions and the first thing is really sitting down with them and working out what their values are and where they want to make a difference and an impact because If you do that, it's going to make their philanthropy far more rewarding and they're going to stick with it because it it just, you know, it it's something that's very personal to them and their family.

Rydyn ni'n gweithio yw'n gweithio yw'n gweithio yw'n gweithio yw'n gweithio yw'n gweithio yw'n gweithio yw'n gweithio yw'n gweithio. ac yw'n yw'n yw'n yw'n yw'n yw'n yw'n yw'n yw'n yw'n yw'n yw'n yw'n yw'n yw'n yw'n yw'n yw'n yw'n yw'n yw'n yw'n yw.

Um and that that's the sort of the structuring part. And then implementation is making sure that we that's when we start to really partner with other advisors. So for example, we bring in

ESG or impact type investing, that's um something that I've got a good working knowledge of, but I certainly wouldn't advise on it. So I'd bring in um the right partners for them to speak to about that. And also um due diligence on beneficiaries is something that I wouldn't do, but we we've got a number of great partners that we work with who will sort of make sure that they select the right beneficiaries to work with.

And then we can also give advice as we go along. So governance is often a big issue for family foundations. So we make sure that they're structured and set up in the right way. Mae'r cymdeithasol o'r cymdeithasol o'r cymdeithasol, sy'n yw'r cymdeithasol o'r cymdeithasol, sy'n yw'r cymdeithasol. We're there to really hold hands whenever advice is needed as we go along, but I suppose a lot of our work is done at the initial stage when they're looking at strategy and setting up the foundation.

Okay, thank you. And and I suppose when we then turn to other experts to bring in to the the discussion with Lance, it would be quite natural to turn to an organisation such as the Charity Seattle Foundation. And and I'd like to explore with Mark what happens next then in terms of a client who has been advised to speak to you and they have the initial conversation. How do you take things to the next stage?

in ensuring that the client is adequately advised throughout their journey. Thanks, Darren. Yeah, it's really A really enjoyable part of the process we we find is when the the client first comes to us, very often they have been recommended. by uh one of their professional advisors.

Often it's a lawyer, but quite often it's a tax accountant, and sometimes it would be a wealth manager as well. So the conversation has already started about philanthropy and clearly they have made a decision that they they want to at the very least explore. Philanthropic giving. But very often, the the client, whilst they may be highly experienced in their area of business, they may be very successful in that area.

they will often feel really quite uncomfortable in the world of charity and in the world Because they will think, you know, I don't know what good looks like there. I don't know what a well-run charity looks like. I don't know how to assess is this charity actually achieving what it says it achieves? Is it can it achieve what they're saying to me that that they'll achieve when they're asking me for a donation? And so they feel out of their comfort zone. And that's where we will very often

seek to step in. So our advisor Are focused more on the impact strategy. And so we work really carefully with the other professional advisors in the in the client's life because we are constituted as a charity and we're registered for various uh Financial crime type.

regulations and of of course re regulated by the the charity commission as well, but we can't give tax advice, we can't give legal advice, and we can't give investment advice either. And clearly being out of the the shackles of of of of that is is is a great place to be. It gives some hindrances as well, of course. But what that means is that we have to really work closely with the community of advisors that are around.

Clients. So working with their lawyers when there are legal matters involved, working with their tax accountants when tax planning might be coming up. You right now. right ahead of the self-assessment uh tax deadline on the 31st of January. You know, there's a lot of conversations with those sorts of advisors and of course the investment strategy.

as well. And so that means that we, you know, we work alongside all the different advisors in the client's life. And our focus is usually on offer what is the right sort of a structure to sit your philanthropic capital within, but also what are the the what is the strategy for your giving. And then when they come to be making donations.

out to charities in the UK or around the world, we're doing the due diligence that the trustees of a charity always have to do. And in the case of a donor advice fund, we're doing that Instead of the donor having to do it and having their own trustees. So we're doing the work to stay within HMRC and charity commission rules on foreign grant making, on

ensuring that the right reporting has come back from the charities, as well as, of course, the more impact-focused work. So we're doing that compliance angle and the impact advisory angle as well. Okay, Mark, thank you for that. Very useful. I I think the it's clear to see that not one advisor can cover all of the angles when it comes to philanthropy. And indeed, uh this is a multifaceted area and

Uh, what what is clearly becoming very important to our clients is how they invest their money. So it's not just about giving money away, but investing money becomes very important to them as well. And I'm just about to to introduce Rebecca, who uh as I say, I was an author of an article, as we all were, for uh Philanthropy Impact magazine. And at the start of Rebecca's article there was a deeply philosophical question where her and her stepdaughter were on holiday in Crete.

And the question was raised, Well, what's it all for? And Rebecca, I'm quite interested in in in uh listening to how you answered that question and indeed your thoughts on uh how you can advise clients who wish to make an impact with their investment. either through impact investing itself or through the um lens of ESG.

It's uh it's a key question that at some point in our lives we we all ask ourselves, you know, what's what's the purpose of life essentially. Um and and and quite often we are far too busy in our lives to really take stock and and think. There's an author that I really quite like called Chris Lewis, and he he wrote a book called Too Fast to Think. Um and he uh he talks about how we have constructed this uh a society in which we are constantly surrounded.

By social media. We are constantly bombarded with information. It's a go-go-go society in which we really don't stop and think. And although Catherine, Mark and myself and and also you, Darren, we have very different roles. One thing that potentially can unite all of our Is that as advisors, we can create that safe space for clients to really stop and actually think. What is it for? As Catherine said, I mean, she she and I come from um

different points in the in the client advice. And as she quite rightly pointed out, lawyers are normally the first point of call for philanthropic services. But um we are quite often uh as investment advisors, wealth managers. Clients would often uh sort of uh speak to us about um their wealth planning requirements. Um and so I think uh that we have as advisors an obligation. To ask clients about purpose and And to really create potentially A sense of purpose for their wealth.

they can they we can we can create a framework for them um and we can give them an avenue really uh to explore uh aspects that Catherine has touched on, such as values. such as what they want to achieve, what their legacy plans are. Um and so so yeah, that was uh uh I think for me. The point is actually in my professional career having the liberty to be able to ask extremely wealthy people those questions and perhaps myself creating an impact as a result.

And and I suppose a natural uh lead on from from that particular question, Rebecca, is around How you advise clients in difficult times such as we have at the moment with high inflation and and stressful economic times. And indeed that was the premise in which we we all got together to to explore that. So does high inflation and uh cost living crisis and the economic times that we live in have an impact on the advice that you give?

It does indeed, because uh uh human tendency uh is uh is is such that we tend to we tend to want to protect uh our ourselves first. because I'm going to uh invest sustainably, for example, or be I or if I'm thinking of giving uh money to to philanthropy. um we might then decide uh to cut back on that because perhaps I'm foregoing an investment opportunity if I invest sustainably or perhaps now is not the best time to um to give. uh to causes that are deep uh close to my heart because if I do so

What's good, what's inflation going to do to my wealth? And is that going to is it going to destroy my wealth? And so our job can be really to show how. Through an investment strategy that invests sustainably, you can, if you, if that is the case, you can achieve your goals whilst at the same time being true to your values. Sorry, I can't fix the lights in my room. Yes, don't worry. Don't worry. Very sustainable at Hawksford and the lights go out after 30 minutes.

So um tak taking that taking that further then, Mark, you know, um the in your article you you you you talk about um transition to net zero and and and the impact of younger generation and I'm quite Keen to explore the the trends that you're seeing uh uh in in philanthropic given and in impact and basin in particular. And d does the current economic climate have an impact on those trends in in in what you're saying?

Yeah, there's an enormous amount going on at the moment, both in terms of change that was happening anyway, but undoubtedly changing attitudes that that have happened over the the last twelve months or so as we've seen a real change in the economic climate and the And inflation in particular.

In terms of the trends that we see on d you know, and whilst I don't like making generalizations about particular generations or people based uh on their age or their gender, you know, h here are some general trends with a caveat.

Of course, there are always exceptions to to these rules, but undoubtedly there are a younger generation of donors who are particularly interested in environmental causes. And the there's there's definitely been a a real surge in interest in in our clients giving to to charities that are focused on on environmental matters, both

dealing with very specific ecological issues in particular parts of the world, but then also the wider issues of climate change and the effect that human activity is is having on the climate. Clear th th there's definitely a change there.

Uh, something else that we saw was in many ways the pandemic drove a resurgence in interest in local and place-based philanthropy as people became more uh the you know refamiliarise themselves with with their local communities and and the the places in the early They live. There was undoubtedly

a bit of a shift away from national or international giving uh towards more local focus. Not that you know everyone sort of pulled out of uh of of supporting international development, but but undoubtedly people wanted to start finding more community-based. causes within the the neighborhoods in in which they live. I think the other big trend that we've seen in terms of people's attitude towards impact is that

We manage the money that has been donated into a donor-advised fund and before it's granted out to a charity. Were we having this conversation 10, 15 years ago? It would have been very widespread to say, well, you know, invest that money for as much impact as you can possibly get. It's charitable money, but you know, invest it for the highest returns, which means you've got more money to give away and don't think too much about what is investing.

both the younger generation, but but actually this this is pretty widespread across the age spectrum. Now that's really just an increasingly rare perspective on how you should go about your giving. Almost all of our clients want to say, look, we want the money that we've set aside for charity. as an absolute minimum, you know, a a a neutral impact on the the environment, but ideally we want it to be having a positive impact on

on the environment as uh as a minimum. And then you know we we want so we want those in terms of the investment of the capital that is there as well as the impact of of the the donations that are going A final thought in terms of the economic environment and your question there, Darren, picking up on what you were just saying, Rebecca.

We've definitely seen some clients who make an annual contribution into their donor-advised fund and because of what markets did last year, feel like they have a lot less money to give away than they would have otherwise. Some have given cash instead of when they usually would have given shares because those shares are not sitting on such highly appreciated values as they were. And so they replaced it with cash. Others have pulled back a bit.

and and overall given a little bit less. So we will see what happens in the in the long run. Generally speaking, activity levels are are good and and are growing. client by client, there are some people who undoubtedly feel like they have less money to give away than than they did previously.

Okay, thank you. And and it's useful, Mark, that you touched on some of the motivations for for clients when they when they speak to you. And and I I want to turn turn back to Catherine and and ask about uh those initial conversations that that she has with wealthy clans who who w who want to explore what can be done philanthropically. What what are the motivations that that that do you see, Catherine? And then do you

And and this happens quite regularly in my in my area. We we have clients who come along and say, Well, I don't know what I should be doing, but I want to do something and then can you give me some guidance on that? Is is that sort of

Uh example that I've given is something that you see. Yeah, I think that again there's a huge a huge range because people are also individuals. So I I think a common theme is wanting to give something back. I think that That's one of the most common themes because people who tend to have, you know, they've done very well themselves or they've inherited a lot of money and they

and they feel quite fortunate and they want to do something to give something back and make a difference. I think that's probably the most common theme. I think you're right that sometimes clients come to me and say, I w I want to do something. I don't know what exactly or how much should I give. Can you give me an idea of how what percentage should I give away? And that's always a really tricky question.

Because you know, it's um yeah, yeah, they I mean what are other people doing? And I can, you know, and give them some guidance of but it but it varies so massively. The short answer is just give as much as away as you comfortably can, making sure that your and your family needs are looked after and give yourself a bit of a buffer just in case.

something goes wrong. But it varies massively from clients and and perhaps also maybe a a a more recent, it's come up once or twice is reputation. So I think Yn ymwneud â phobl. Yn ymwneud â phobl. Yn ymwneud â phobl. ond for a variety of reasons they think it would be a good thing for them and their family to be seen, to be doing something. I have to be honest, that's much rarer for me. More clients want to be confidential about it.

And they don't want their name out there. But I have had a couple of clients who, for various reasons, see it sort of as a a form of as like restitution. So a whole variety of reasons, but I think the most common is wanting to give something back and do something positive, which you know, to my mind is the best reason really. It's wanting to make a and make a positive difference.

So the the the the whole drive of this um publication from Philanthropy Impact is around the life cycle of of a private client. And in the last seminar, I had a hypothesis where I said That philanthropic given tends to come later on in the life cycle of a private client, in that they've made a significant amount of wealth. Uh, they've uh provided for their families, they've uh ensure that the financial goals of their families have been met and the financial security of their family

has been well looked after. And it's once all those things are in place that it is more likely to have a conversation with clients around philanthropic goals. However, ESG and impact investing and particularly ESG tends to come much earlier, in my opinion.

in the life cycle of a private client. And I'm interested in exploring whether that is the uh experience of uh the panelists as well. And I think probably uh I'll I'll turn to Rebecca and say, Uh, given that you're a resident investment expert, uh, w whether it it is true to say that ESG investment comes much earlier in the life cycle of a private client than pure philanthropic given or indeed impact investing.

Uh for the reasons that uh that you've outlined already, and it And and also turning back to that question of purpose, we tend to we tend to think what was it all about when we're when we're nearing the end of our lives as opposed to thinking about it at the beginning of our lives, which is what we really should be.

is thinking about it at the beginning of our lives so that when we c we can then fulfill that purpose um I be before it's too late. But uh but yes, the younger um generation I tend to view impact investing, sustainable investing as hygiene factors. They I they simply and I think it's admirable. I'm just I'm going to s put my it stake in the ground of whatever the English. Sorry, my first language is fascinating.

So so sometimes it g I I get a bit confused with uh with English. But um so so so for me, um I I I think that is I think it's absolutely right. You know, why are we going to uh why would anyone invest for their financial future whilst at the same time undermining it? It makes absolutely no sense to me whatsoever.

Um so uh so the so millennials, uh generation Z uh uh would just simply not countenance investing in uh in in certain areas or if a company was uh was abusing human rights, they would be that they would think, well, why on earth should Um and and actually they've got a point. Not only does sustainable investing provide the same level of returns as their non-sustainable or non-ethical, whatever title you want to use, counterpart. But it also does so with less risk.

Because you can mitigate against things such as reputational risk or the risk of stranded action. So uh so yes, it does come earlier in the cycle of um uh of uh of a private climate for those younger generations. They are thinking about that when perhaps older generations aren't. And as well, they they don't have such a disjointed idea as older generations. Older generations might sometimes see or have a tendency of viewing investing in a different silo as philanthropic.

And so there's there's more of a complementalization in that regard, whereas so whereas younger generations just tend to view things as more as more uniform. But that is changing, I think. So just taking that description of uniformity a little bit further, slightly controversial question that I'm going to pose to Mark. And that is, are younger donors just focused on the environment or do they focus on a range of issues?

Yeah, so the I think they environment is is high up the list. Human rights are really high up the list as well though. So we're where you we uh we have a lot of younger donors who who are focused on uh anti anti human trafficking on empowerment of women and girls in the developing world and in developed world as well in LGBT and other equality causes. So I I think environment, human rights.

are are really high on the list for for younger donors. And I think that's a a byproduct of of the the world in which they've they've grown up in, you know, both in terms of what they've been taught about the environment. uh at school, but also the the kind of the cultural shifts that have happened, whilst many of us uh have been in our adult lives, we're kind of just there for for for those generations right from from when they were much, much younger. So Okay.

And uh d just following on from that, Mark. Um I I one of the questions that has come up and there was referenced to it in your article is the role of innovation. as regards younger donors. Can you can you explain in a little bit more detail um whether innovation does have an impact on on younger donors and and is that a a generational issue?

I would say it certainly it does. Less of a generational issue. I think though it's more of a phil philanthropy issue. And we would say to our clients: you know, philanthropic capital is the ultimate risk capital. you know you're not getting it back you know from from a financial risk point of view. So That you may want it to achieve all sorts of things, but the one thing you can't ever do with it is get it back in your own pocket. You've given it away.

cross the charitable threshold. So be experimental with it, be innovative with it and take big risks with with your with your philanthropy and will help people to track the effectiveness of of that and and to see what the the learnings are coming back. And so we really encourage clients to to be innovative with their giving.

I think I'm back now. Hello, John. Hi. Is it okay if I take over? Of course. Okay, thank you. Uh uh that was brilliant. Thank you very much. Um It's very clear from this discussion that advisors from different professions really have to work together to meet client needs. So thank you for emphasizing that. And uh um in our research, we've indicated that there's 23 distinct services that are needed on the on our donor journey.

It's also important to keep in mind the role that advisors can play around encouraging more impact and giving uh uh so impact uh investing, sorry. Um so that's great. Um okay final words of wisdom. Um So 30 seconds, um uh just to add your final words of wisdom and I'll start with Mark.

I would say the talking about philanthropy and talking about impact just gives you a really great opportunity to to get to know clients better, to talk about their families, to talk about what drives them, to talk about things that have happened in their lives that have uh have motivated them to to get into to giving. So really just use it as an opportunity to to deepen those relationships with clients and to broaden out the conversation that you're having with Okay, terrific. Katherine.

I suppose similar lines really I think you know uh don't be scared about talking to to clients about their values and make sure that the planning is really done upfront. And and I think as Mark said, the the lovely thing about advising in this area is that it's a provided you get it right, which hopefully hopefully you do. It's a feel good area and it tends to really cement

those relationships and it's very intergenerational. So you do get to know the children. And if you do a good job, then you'll end up hopefully advising the children as well. And um yeah, it's it's it's a great area to advise in and I love it. So I find it really intriguing how important it is to talk to uh to clients about their values.

And how shy some advisors are about doing so. Oh yeah, most lots of especially lawyers, they hate it. Oh, okay. Well we run specialized training around that kind of thing. So very happy to uh talk to anyone around that. Uh Rebecca en Franca. Yes, and I c I can endorse the uh the training that uh that you run, John. So uh I I I think my I think uh from my perspective, we can as advisors, we have a choice.

We can show up and we can do a good job and use our technical, legal investment expertise, and we can do a really good job. um without investing our own our own passion into it. Or we can really view that this generational change and that this point in history offers us an opportunity to do something different. when slavery was uh was abolished in the United Kingdom, Wilberforce partnered up with a poet, Hannah Moore, and uh and and they both uh tackled the issues of their day head on.

We have similar issues that are ongoing with climate change, with social inequality. And there are issues that we in our profession, can actually bring to light and we can ask people about their purpose and perhaps sometimes the answer will come back. Well, I really don't know. And we will feel a bit deflated, but just simply the power of posing a question.

And having it out there will make people think about these issues more. And the more voices that are asking these questions, the louder the roar, basically. So that would be my final thought. Great, Rebecca, that's fantastic. Darren, the final word to you. It's very difficult to follow on from Rebecca given the power of the words that she's just used, but what I would say, and it echoes many, many of the thoughts that she has expressed.

our world is evolving and our client needs are evolving and we as advisors need to evolve at the same time. And I know John, it's a bit of a plug for your business, but we have benefited hugely from partnering up with Philanthropy Impact. not just in terms of the exposure of of the services that we can offer, but the training that you provided to members of my team so that they can at least begin the conversations with clients. What is your wealth for? And how can we help you achieve that?

So I I think we need to evolve as client advisors and we need to seek the input of those around us in the industry who know better than us how to advise clients in this particular area. Those are my words of advice. Uh Darren, thank you very much for the plug. Just keep in mind that we did not pay you uh for that or Rebecca. So thank you very much for that. Uh Zophia, final, final, final word for you.

Thanks, John. Thanks, guys. That was brilliant. It was really, really good. Sorry, I'm not supposed to say guys. There is a question in QA. Well, it's not a question, it's a comment, but it's it's coming from the side of charities, which uh a perspective from charity. yw'n yw'n yw'n yw'n yw'n yw'n yw'n yw'n yw'n yw'n yw'n yw'n yw'n yw'n yw'n yw'n yw'n yw

So I mean it's r it's really interesting to to talk about that and think about how as advisors you can really help donors understand that they have the wealth and they're gonna be fine if they give away and all the different ways they can do it. So it's uh Great, thank you very much. Right, on to plugging events. Um we've got two face-to-face events coming up in the next two months, one uh uh both in London and Red, but both um are looking up some great

Conversations. The first one is at BDB Pittman's on the 18th of January. Does wealth advice require a radical rethink? Which I think is a great follow-up. And um Thursday the ninth of February we're at Brown advisory and we're looking at meeting changing client expectations, future proof of your fans, the values-based approach across the spectrum of capital. Nice, just rolls off the tongue.

So yeah, please do come and find out more about that from me. And if you would like copies of the magazine, if you haven't found them yet, please do just drop me an email. All right, thanks everybody. Have a great week. Bye. Thank you.