Senior private bankers, lawyers and
philanthropy professionals are joining forces to speed the
development of the market for philanthropic advice. Many private
banks have an offering in this area, but opinion remains divided on
the best way to provide the service.
Wealth management professionals from Barclays
Wealth, Coutts, Hoare & Co, HSBC, JP Morgan and Sand Aire have
been named on an influential steering group for delivering
philanthropy services.
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The group, chaired by Dame Stephanie Shirley,
the government’s ambassador for philanthropy, will attempt to
develop the market for philanthropy advice through quarterly
meetings and the sharing of best practice. It also includes high
profile lawyers, accountants and family offices.
The steering group has been assembled by New
Philanthropy Capital (NPC), a consultancy which offers training
services and gives advice on effective donations. It was set up
after research conducted by NPC’s Plum Lomax, a former Merrill
Lynch private banker, which showed collaboration, leadership and
government involvement were required to develop the market for
philanthropy advice in the UK.
“There is a fantastic opportunity being missed
by many banks, law firms and family offices,” said Lomax, senior
consultant at NPC.
“Clients are now coming to expect their
advisers to help them with their philanthropy, yet very few
advisers have worked out how to do it well. Those who are
supporting their clients’ giving are beginning to reap the
benefits, increasing their revenue and deepening client
relationships.”
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By GlobalDataResearch from wealth consultancy Scorpio (see
chart) showed private clients displayed an increasing
preference for philanthropy advice provided by wealth managers
between 2005 and 2007. Private banks responded to this by improving
their propositions, in particular through establishing in-house
teams which specialise on advising clients on charitable donations
and setting up foundations.
Most wealth managers continue to use
third-party providers for part of the process, particularly for due
diligence and analysis on charities clients are interested in.
While philanthropic donations have not been significantly affected
by the global recession – £2.6 billion was donated in 2009 in the
UK, compared to £2.4 billion in 2008 – the NPC report said it had
forced some private banks to reduce investment in the area in
recent years.
Mario Marconi, head of philanthropy services
at UBS, which was one of the first to establish an in-house
proposition in 2004, said he saw a “clear and positive trend of
increasing money coming into the philanthropy sector in general” in
Private Banker International’s recent report on the
subject.
“The way we see 2009 is that it is a
short-term stop, if at all, but I expect it to continue growing in
the coming year and beyond,” he added.
The main benefits private banks gain from
offering the services are improved client servicing, the deepening
of client relationships and improved client retention.
However, because of the difficulty of
measuring these concepts, it can be hard to establish a business
case for investment in the service, and part of the steering
group’s remit is to address these barriers to the provision of
advice.
Most private banks do not charge clients for
philanthropy services, so there is no direct revenue gain for them.
Lawyers, who also advise clients on philanthropy but have a
business model based around charging fees, have a clearer revenue
stream, and are also likely to benefit from working with clients on
areas like setting up foundations.
The report gives the example of how UK-based
Coutts & Co, which has a dedicated philanthropy team and
is considered one of the market leaders in this area,
addressed the issue. It appointed an independent consultant to
measure the impact of its offering on improving client trust and
loyalty, differentiation from other private banks and increasing
its share of wallet among client assets. This helped quantify the
effectiveness of its service, and establish a stronger case for it
within the bank.
There may be lessons private banks can take
from family offices, according to a case study in the report. It
shows how an unnamed multi-family office managed to convert 16 of
24 client enquiries into philanthropic services into fee-paying
services.
A dedicated philanthropy expert at the
business collaborated with relationship managers across the
business, helping them become more confident in talking to clients
about the issue.
“The relationship managers have become more
knowledgeable at screening their clients’ requests, so those with
the greatest need, and therefore the likelihood of conversion to
fee-paying work, are introduced to the philanthropy team,” said the
report.
The NPC also stressed no information that
would compromise any elements of client confidentiality or weaken
the competitive advantage of the different businesses involved in
the group.
Senior wealth managers on the steering
committee included: Emma Turner, Barclays Wealth; Diviya Gosrani, C
Hoare & Co; Bob Loft, C Hoare & Co; Mark Evans, Coutts
& Co; Maya Prabhu, Coutts & Co; Lord Janvrin, HSBC Private
Bank; Rebecca Eastmond, JP Morgan Private Bank; Paul Knox, JP
Morgan Private Bank; Alexander Scott, Sand Aire.
