CHARITABLE PLANNING

Hannah Shaw Grove

Younger clients are changemakers who value impact and technology .

HE NEW YORK TIMES RECENTLY REPORTED THAT “ AN INTERgenerational transfer of wealth is in motion in America — and it will dwarf any of the past .” Our country ’ s 73 million baby boomers , it said , hold half of America ’ s $ 140 trillion in wealth , which they ’ re now leaving to the next generation as they pass or retire . This is a wake-up call for financial advisors . The long-held approaches to wealth management for the Silent Generation and baby boomers won ’ t necessarily resonate with millennials and Gen Z . So how can advisors adapt ? Consider two words : “ impact ” and “ technology .”

Creating Impact : A Next-Gen Priority

If you want to connect with today ’ s younger generations and earn their trust , it ’ s helpful if you understand what motivates and inspires them . These young individuals came of age amid societal commitments to diversity , equity , sustainability , mental health and effecting change , and they deem it important — and their responsibility — to create positive impact in the world through their actions , professions and decisions , including financial ones . They embrace collaboration , innovation , partnership and transparency , and they place greater emphasis on solving larger root problems in addition to addressing immediate needs .

While there are many ways for them to create impact and live with purpose — for instance , by “ going green ” to slow the effects of climate change or by supporting a civil rights movement — the most common way is to “ give back .”

The wealth holders of the future are more apt to view charitable giving as much more than simply donating to their favorite causes .

According to the National Philanthropic Trust , Americans made charitable donations of nearly half a trillion dollars in 2022 . Some $ 319 billion of that came from individuals , while $ 105 billion flowed from foundations . Yet despite those huge numbers , research has found that philanthropy is not a major area of engagement between financial advisors and their clients , even with clients of significant wealth .

Rising generations will likely change this , though . Foundation Source research ( conducted last year with two generations of family members from single-family offices ) shows that younger generations are proportionately more involved in philanthropic endeavors than their predecessors , and they expect to have even greater involvement in the future . Older generations , by contrast , are more focused on wealth preservation and enhancement . Also , younger generations view philanthropy as a way to benefit society while their older counterparts mainly see it as a tool for legacy building .

Acknowledging these generational differences can help financial advisors attune their practices accordingly . The wealth holders of the future are more apt to view charitable giving as much more than simply donating to their favorite causes . Rather , they believe philanthropy is a powerful way to effect meaningful change in the world . The more that financial advisors can help younger generations explore the myriad options for giving and

MAY 2024 | FINANCIAL ADVISOR MAGAZINE | 25