MONEY financial advisers

Why I Talk Philanthropy with Clients

A financial adviser who once kept mum about her philanthropic investments explains why she isn't shy about them now.

I never used to bring up with clients the subject of philanthropy.

Since 2005, my husband and I had been personally investing in “high social-impact investments,” but I hadn’t been talking about them with the people who came to me for my financial planning services.

Philanthropy was too personal of a topic. Whether clients donated money or not was their private matter.

And, as a financial adviser, I certainly wasn’t going to recommend any investments that earned such negligible returns–say, only 0.5% annually–no matter how much good these investments did in the world.

Then, in 2009, someone hired me to help her outline a thoughtful approach to philanthropy. That invitation tipped off a series of conversations about what she wanted. We went far beyond talking about identifying charities, how much to give, and the pros and cons of establishing a donor advised fund.

These discussions made me realize that I had been holding out on my clients. I saw that I had been making a decision for them about whether or not they wanted to invest in something with low returns but a high social impact. In doing so, I was denying them the deeply meaningful connection that I personally experienced.

I learned then, all over again and in a new light, what I already knew to be true: My obligation as an adviser is to hear what my clients want, to explore their options with them, and to help them implement the decisions they deem best. Sometimes that decision is to allocate a defined portion of an investment portfolio to high-impact investments.

A few years and many conversations later, I’ve learned to let go of the label “philanthropy.” Fundamentally, the conversation is about what people want to do with their money, and sometimes that means investing a clearly defined portion of the portfolio purely for social impact.

That may mean making a peer-to-peer loan, investing via a grassroots organization that supports local farmers, or being a seed investor in a local start-up. It might be an intentional decision to re-route a portion of the dollars clients had been donating to charities and instead choosing investments which lend those dollars to people who need access to capital.

Interesting in talking about this type of philanthropy with your clients? Here are two useful resources for finding high social-impact investments:

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Jennifer Lazarus is a certified financial planner and the founder of Lazarus Financial Planning, an independent, fee-only firm specializing in the financial planning needs of socially responsible investors in their 20s to 50s. She most enjoys helping people reach a place of empowerment and financial calm.

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