A Piece of Mind: Philanthropy - is Wealth Management all about the money?

03 May 2016James Goad

Piece of MindWealth Management and Private Banking

Building relationships within Philanthropy and how we can work together to effectively drive more and better giving through UHNWIs.


It occurred to me what a fantastic opportunity our industry has to influence meaningful social change.  The revelation came during a breakfast briefing this week kindly hosted by EY with many the UK’s largest Private Banks, Wealth Managers, DFMs and Multi Family Offices.  The common thread that brought us all together was philanthropy and how as an industry we could work together more effectively to drive more and better giving through UHNWIs. 

Many of you will remember a few years ago when the reality of RDR hit and there was a call for the industry to work together to influence the tripartite and ultimately demonstrate the value of the Private Wealth industry to both society and the economy.  Since then, the WMA and BBA have agreed to work together more closely to achieve this, and it is great to see Liz Field tirelessly driving the WMA forward. 

However, I digress… one idea that sprung out of the whole process was for the industry to track the amount of philanthropy the industry influenced.  What a great stat that would be to catch the eye of politicians.  However, this is far easier said than done.

Philanthropy is still relatively immature in our industry, and there are only five or so players who have managed to create an established proposition over the past ten years.  What is comforting is the fact that these groups are happy to share best practice with the newer players to help the industry as a whole seize the opportunity.  Fantastic I hear you say with Starship blaring “Nothing’s gonna stop us now” in the background.  Before you get carried away, there are few bumps in the road to overcome first.  At the risk of dumbing it down, I am going to simplify them into three bite-sized chunks - education; having a business case; and getting buy-in.

The philanthropy landscape is complicated, full of many stakeholders with complex relationships for arguably quite a small market.  As an industry we still have a lot to learn and that is where intermediaries such as NPC have an important role to play. 

Secondly, given this commercial world we live in, the biggest challenge is how as an institution you demonstrate the business case for philanthropy - whether that is to your Stakeholders; Management team; RMs; or clients.  On paper offering a philanthropy proposition for your clients should be an easy sell… deeper relationships with clients; increased client retention; additional revenue; and an adrenaline shot to your brand and value.  But how do you get the people that matter to sing your tune?

As with all things, it is important to get buy in at the top, and this means ensuring management feel and understand the benefits of a philanthropy offering as its commercial measurement is as much an art as a science!  You also have to get your front office brought in as they are your gateway to achieving scale.  There are no short cuts here.  You will need to spend lots of time with your RMs to ensure they can talk confidently about philanthropy with clients; identify key triggers; and understand what success looks like.

And once you’re doing it, how you measure success?  Opinion on this front is pretty much divided down the middle with half saying it is too difficult.  However, if the other half say you can do it and are walking the talk, there must be light at the end of the tunnel.  The obvious answer seems to be measuring uplifts in AUM and how many new clients choose to do business with you.

One thing is clear, for this to work you need to start thinking about philanthropy as part of your overall wealth planning for wealthy individuals - not a distinct proposition.  As an industry, we need to start thinking beyond the financials.   It is time we had a more balanced perspective around the financial, human and society factors.

At Owen James we are fortunate to have the opportunity to sit with the industry’s leaders as they thrash out the biggest their challenges.  Often these include building trust; connecting with the next generation; differentiating their proposition in a crowded and commoditised market; and enhancing the customer journey.  Philanthropy presents an opportunity to bridge all of these and help demonstrate the value of our industry to both society and the economy.

This philanthropy journey to working with the industry to enable more and better giving feels like a noble one, and one I am looking forward to taking.