Too few financial advisers are taking advantage of the latest philanthropy structures to benefit their clients and grow their businesses, according to Australian Executor Trustees (AET).
In a bid to combat this AET, which is a division of IOOF, today launched enhanced adviser-driven philanthropy solutions. It has also assisted Queensland University of Technology (QUT) Business School to research the issue and is working with other partners to develop a specialised education program to help advisers integrate philanthropy into their practices.
IOOF’s General Manager Trustee Services Gary Riordan said the enhanced philanthropy services had been developed to meet the needs of advisers and were part of a wider initiative to increase the level of philanthropy in Australia.
“Despite an encouraging trend in the growth of structured philanthropy, a recent QUT study that compared Australian giving habits against other Western nations indicated we are well behind our US, UK and even NZ peers.
“Too few advisers are aware that because philanthropy often involves family giving it can actually lead to an increase in funds under management, as well as increased client satisfaction. Building the knowledge of financial advisers, lawyers and accountants, who are the gate-keepers to many Australians who have the capacity to make significant gifts, is critical to growing awareness and adoption of philanthropy,” Mr Riordan said.
Room for high net worth Australians to give more
AET’s Head of Philanthropy Ben Clark said that less than one percent of Australian high net worth individuals had established philanthropy structures to share their wealth. This segment of wealthy Australians could benefit significantly from generous tax incentives that were available through philanthropy to the less fortunate, he added.
Mr Clark said the key differentiator of AET’s approach to philanthropy support was that financial advisers maintained control of client relationships as well as the funds under management.
“Our business model means that we partner and collaborate with professional advisers to integrate philanthropy into their practices. We support advisers and help them counsel their clients on the appropriate giving structure. The adviser then invests and manages the assets.
“We focus on providing world class fiduciary services and trust administration – rather than investment management. And because philanthropy often engages relatives and friends of a client it can lead to the adviser building relationships – especially with the next generation,” he said.
AET today launched enhanced private ancillary fund (PAF) services for advisers whose clients want to create personalised and everlasting giving programs, a donor-advised AET Foundation and a customised, transparent and efficient reporting solution for charities and not-for-profit organisations.
Mr Clark said he was excited at what the enhanced AET offering could achieve. “Our service is built around a simple concept, aligned to the growth of independent and values-based financial advice. Decision-making is kept in the hands of the adviser and the client.
“By using IOOF’s network of more than 1,100 independent financial advisers and by reaching out to additional practitioners, we are well positioned to grow philanthropy in Australia through the financial advice sector.
“We have been helping Australians support their communities for more than 130 years, are deeply committed to growing philanthropic practices and recognise the critical role that financial advisers and estate planners play in this,” he said.
AET currently manages more than 110 charitable trusts and distributes millions of dollars to a range of charities each year. Its role is to act as a steward and assist donors to be more effective in their philanthropy.
Mr Clark said a PAF was a popular philanthropy structure because it was a tax-efficient charitable trust which an adviser could set up for a client during their lifetime to benefit nominated causes which continued after their death, in perpetuity.
“Healthcare and media entrepreneur Paul Ramsay established a PAF when he was alive. Upon his death last year, he left a $3 billion bequest to his PAF, which is expected to distribute around $50 million a year to his nominated charities.
“Another option is to contribute funds to a public ancillary fund like our AET Foundation, which distributes funds on a client’s behalf to agreed charities over time. There are many ways to transfer wealth from one generation to the next and it is important that philanthropy is fully considered in estate planning,” Mr Clark said.
