The high-profile former financial planner Kevin Bailey has urged the financial planning community get more involved in philanthropy as a way of building better businesses and deepening client relationships.
Speaking at a Stella Network event on philanthropy in Sydney, Bailey, a director of Shadforth Financial Group (SFG) until its sale to IOOF last month, said an ability to connect with the hearts of clients is what sets financial planners apart from other finance professionals.
“Warm philanthropy is much more fund than cold philanthropy,” Bailey said.
“Cold philanthropy is from the grave, when you leave a bequest; warm philanthropy is when you see the smiles on the faces of people when you’ve changed their lives.”
Receptive
Bailey (at left in the accompanying picture, alongside Tara Hunt of the Hunt Foundation and Louise O’Halloran of the Australian Environmental Grantmakers Association) said that as planners’ clients get older, they are likely to be receptive to conversations about philanthropy and creating a legacy.
“The baby boomers really care,” he said.
“They really are interested in doing something more than just what their parents did. And that generation is coming into retirement.
“Financial planning in this country is 35 years old and we’ve had Jim Stackpool with CEG, Bill Bachrach with values-based financial planning, and people are recognising that if you want to do financial planning you’ve got to differentiate yourself.
“Anyone can be an accountant; anyone can do the ‘head’ stuff. But if you’ve got a connection with clients at a heart level, at a values level, you’re not likely to lose that client.
“So people within the financial planning fraternity are recognising that it makes good business sense.
“Financial planners are raising the question with people; and [people] are raising the question with financial planners.
“Once you start bringing up the topic, people say, ‘Yes, I want to be involved in that. I don’t want to be just involved in making as much money as I can and just selfish pursuits’. They want to be involved in different things.”
Giving to others
Financial planners are skilled at the technical aspects of guiding clients towards and into retirement. Part of that transition should include a discussion about what the client wants to pass on to the next generation. Giving to others is often preferable to giving to their own children.
“If we want to keep our children as perpetual dependants we can buy them the car, we can buy them the house – we can buy them everything,” Bailey said.
“And then they never leave and our clients complain that they’ve got this boomerang generation that keeps coming back all the time.
“What we need to do is empower our children as individuals. We need to give them the dignity of buying their own car, and saving up for something and getting it.
“We see so many dysfunctional clients who just want to control their kids and keep giving them everything s they can keep this power over them. But there’s lots of people starting to wake up to this.”
Leading by example
Bailey said philanthropy is an area where leading by example pays big dividends.
“It’s got nothing to do with earning ability,” he said.
“What’s interesting is if the financial planner gives even a small amount, if they’re starting out, and is involved in some way – whether it’s giving their time, giving their talent, volunteering one day a week, that sort of thing – sharing that builds trust and also that gives permission for the client to start opening up about what they want to do.
“It’s amazing how many times I’ve shared with clients some of the things I get involved in, and the client says, ‘I’d like to get involved in that too’.
“It prompts them to want to be involved, and it’s important as financial planners to share that.
“Those that are involved in doing something themselves are the successful ones.”
