Advisors who don’t find a way to bolster their philanthropic planning services and savvy could “be left behind” within several years, according to the head of a Bay Area-based firm focused on educating RIAs on the issue.
“The reason is because this big wealth transfer is happening, and they’re expecting about $11.9 trillion to be going to charity. That’s huge,” Dien Yuen, the CEO of Daylight Advisors, said in an interview with WealthManagement.com. “So (if) you definitely don’t want to lose your AUM, you’d better figure out what products you’re going to be putting on the market to try and keep this money.”
Before founding Daylight Advisors, Yuen worked at Evercore Wealth Management and founded the Center for Philanthropy and Social Impact at The American College for Financial Sciences. She also taught advisors and achieved a Chartered Advisor in Philanthropy designation.
Yuen’s ambitions for Daylight include training approximately 10,000 advisors in the next three years on the ins and outs of philanthropic planning through a number of certification and education programs, including the newly launched Impact Philanthropy Advisor certification program for wealth and philanthropic advisors.
“The idea was, could we do something that looks at the modern blended global family and not just teach the advisors how to work with them from a financial and estate planning perspective, but also from the philanthropic planning perspective?” she said. “Some of these advisors are great at planning, we’ve got attorneys who are amazing estate and family planners, but they can’t figure out how to put the three together.”
To Yuen, part of the challenge stems from advisors’ lack of familiarity with philanthropy-related services or tools beyond the basics.
Advisors also may find it difficult to discuss family dynamics, particularly how to raise philanthropic values (and a family’s charitable legacy) in that context. Some firms direct advisors not to raise philanthropy altogether, as they worry it may drift into political, issues-based conversations.
“A lot of them are very hesitant to even bring up philanthropy because they don’t know where it’s going to go,” she said.
The need for philanthropic planning know-how is top of mind for advisors like Padric Scott, a former NFL player and the CEO of the Tallahassee, Fla.-based firm Crossroads Capital Partners. In an interview with WealthManagement.com, Scott described how he met Yuen at the American College for Financial Services while attaining a CAP certification. They maintained the connection, and Scott is now an advisory board member for Daylight Advisors.
Like Yuen, Scott stressed that there were several layers to philanthropic planning competency in the HNW and UHNW space. The table stakes are understanding the tax and estate benefits and not knowing those may lose a client’s trust in their advisor on the issue. However, advisors also need to be able to speak about clients’ hopes and desires for themselves, their families and their legacy.
“What you’ll find is it’s kind of like going to a doctor. While a patient may not have a medical degree, they know what hurts,” he said. “And it’s on the doctors to be able to translate it.”
Often, discussions about philanthropic planning are generated by discussions on other topics. Scott recalled speaking with the husband of a client who had recently passed away. According to Scott, the husband spoke about a historically black college or university that he cared “deeply” about. The conversation between advisor and client morphed into one about the client’s children, the university and how to create “an everlasting impact.”
However, Scott was dismayed by the industry’s approach to learning these necessary skills. He compared it to his pro-athlete peers and said advisors were not “reinvesting in their craft” as athletes constantly do.
“Professional athletes, they don’t just show up and play football or basketball. They’re practicing 24/7 to get better for that one moment,” he said. “So that when it happens, they’re ready for it.”
Beyond the need for more competency in philanthropy among RIAs, Yuen said the HNW and UHNW space is desperately in need of “philanthropy advisors” who are wholly focused on the issue.
Currently, Yuen estimates there are about 800 philanthropy advisors in the U.S., including those who work at banks, multi-family offices and community foundations. (Even a behemoth bank like Morgan Stanley only had about 12 such specialists, Yuen said.)
She cautioned that by 2030, client demand would require at least 3,000 of these philanthropy-focused reps. However, legitimacy in the space is hard to gauge, as there is no standardized certification or education. Yuen hopes to address this via certification programs like the Daylight IPA program so that if a wealth advisor or family wants to partner with a philanthropy advisor, “they know what they’re getting.”
“They don’t know how to compare apples to apples,” she said. “And that’s the problem.”
The October lineup for advisors enrolled in the IPA program stands at 62, and it includes nonprofit fundraisers hoping to enter the space, estate planning attorneys and CFPs who felt that certification didn’t offer what they needed to know about philanthropy.
Daylight’s location in the Bay Area is also well-suited for working with the wide range of entrepreneurs in Silicon Valley, particularly younger potential clients with excess capital and a desire to “leverage” that capital for philanthropy.
But this need makes philanthropic advisors all the more important, as wealth advisors aren’t going to invest too heavily in the nuances of philanthropic giving.
“They don’t need to spend 30 hours doing research on AI and philanthropy. They make more money doing wealth management business,” she said. “So, I think that’s why wealth advisors are really looking for key partners to bring in that they can trust and who can work with their clients.”
