Charitable giving in purchasers’ monetary plans, companies’ enterprise plans

Charitable giving in purchasers’ monetary plans, companies’ enterprise plans

Charitable giving in purchasers’ monetary plans, companies’ enterprise plans

On this week’s particular episode of the Monetary Planning Podcast, Thomas Pontius dishes out charitable planning recommendation whereas breaking down why serving to purchasers give again feels so good. 

Pontius, a monetary planner with Kayne Anderson Rudnick, stops by the podcast this week for half one in every of a three-part podcast collection sponsored by St. Jude Youngsters’s Analysis Hospital.  The weekly collection is targeted on charitable giving and the position wealth managers play in serving to the folks they work with make an affect.

Monetary Planner Thomas Pontius

Kayne Anderson Rudnick

Throughout his dialog with FP Podcast host and lead editorial producer Justin L. Mack, Pontius explains how his ardour for taxes acquired him into the enterprise, how that very same ardour helps him at present when doing charitable planning; and why approaching the dialog with purchasers opens the door to a deeper degree of understanding.

Hearken to the brand new episode — in addition to to all future and previous episodes — by subscribing to the FP Podcast on Apple, Spotify or wherever you get podcasts.


Justin L. Mack (00:02):
Good morning, good afternoon and good night. Welcome to the Monetary Planning Podcast. I am your host Justin L. Mack, wealthtech editor with Monetary Planning. And it’s my pleasure to introduce this week’s visitor, Thomas Pontius, licensed monetary planner with Kayne Anderson Rudnick. Thomas, thanks a lot for becoming a member of us this week on a particular version of the Monetary Planning Podcast. 

Thomas Pontius (00:24):
Thanks for having me, Justin. It is a pleasure to be right here. 

Justin L. Mack (00:26):
Completely. Now this week’s present is an element one in every of a three-part podcast collection Monetary planning is rolling out within the month of Might. The collection will have a look at the locations the place charitable giving and the wealth administration trade intersect and convey you conversations about how planners can present clear pathways to assist their purchasers give again. Thomas, who joined the KAR workforce in 2021, beforehand labored as a wealth planner for Wells Fargo Personal Financial institution, offering tax and property planning recommendation to excessive web price and ultrahigh web price purchasers. Previous to Wells Fargo, Thomas labored as a tax accountant for EY and Andersen (Tax) of their personal consumer companies teams doing tax compliance and consulting for people, trusts, partnerships, companies and estates. And the relationships cast between advisors and purchasers at KAR is one thing that’s extraordinarily essential to our visitor at present. We’ll get into how charitable giving matches into these relationships, the enterprise and emotional advantages of doing so and rather more on at present’s present. However first, Thomas, because the listeners get ready to get to know you over the following 20 to half-hour, let’s begin, at first. <laughs> There’s actually no higher place. So inform us a bit of bit about how you bought into this trade. What attracted you to the world of monetary companies and being a CFP? 

Thomas Pontius (01:41):
Yeah, completely. So once I began in school, I had gone in as an accounting main and simply off the bat I had simply been keen on finance and shares and issues like that. I began doing internships. I had first interned with an insurance coverage firm that did some investing on behalf of their purchasers. And that is not one thing that actually drove me into one thing that I essentially wished to do. I used to be doing loads of chilly calling there, type of slicing my enamel at a fairly younger age at that time. However the place I actually acquired within the planning aspect is about my junior yr of school. I had taken a winter internship with a mother and pop store in South Philadelphia. I went to high school in Philadelphia. And through that interval is the place I actually began to turn into on the tax planning aspect. I had taken a tax class in school too, and it was one thing that I loved. Which, it sounds loopy to assume that any person may truly get pleasure from doing taxes. However I believe that the historical past of taxes is definitely very fascinating and in the end that introduced me out to Los Angeles the place I began working as an affiliate for Andersen at the moment. And the remaining is type of historical past. It is such a parallel to planning as a result of it is the reality that the 2 issues assured in life are demise and taxes. So it at all times brings up loads of distinctive alternatives with purchasers to speak to them about alternatives that they’ve from a tax perspective. 

Justin L. Mack (03:12):
Completely. And hey, will not throw shade your method at having fun with doing taxes. I do know particularly across the springtime, that is on all people’s thoughts. Good, unhealthy or in any other case, and we’d like people such as you who’re enthusiastic about doing taxes, particularly for purchasers when that point comes round.

So simply shifting gears into the subject at hand, charitable giving. Let’s discuss a bit of bit about why it is even one thing that an advisor would need their purchasers of their ebook of enterprise to be doing. Motive I ask is that there appears to be loads of ROI, for lack of a greater time period, particularly on this enterprise, for working with charitably minded people. A latest Constancy research finds that advisors who provide charitable giving and charitable planning alternatives have six occasions the median belongings, thrice the median natural progress and extra money per new investor than advisors who don’t. So that is clearly one thing about giving again, however we additionally see that there are some enterprise advantages to it. Why do you assume that’s? Why do you consider that advisors who work with these charitably minded people are seeing such success simply all through their companies and all through their practices?

Thomas Pontius (04:12):
I believe one, it’s while you provide that degree of planning and one thing that tends to be a bit of extra area of interest like that, it reveals that your agency can actually be very complete within the recommendation that they are giving. So I believe that is a giant piece the place purchasers wish to go to at least one spot the place they’ll have all of the companies type of offered to them as an alternative of getting a number of totally different monetary advisors the place they could even be getting contradicting recommendation in some conditions like that. Having it multi functional home and with the ability to cowl matters like that, I believe is essential for purchasers, particularly in that web price vary the place they are often very charitably inclined. Both on an annual foundation or if it is one thing that they wish to do at demise. So I believe in that sense, that is one thing that they respect so much is simply to have that recommendation multi functional place. 

Justin L. Mack (05:02):
Positively. And such as you mentioned, particularly for these people, excessive web price, the ultrahigh web price people who’re capable of be charitably inclined and achieve this perhaps extra flexibly or perhaps to see one thing that they need to have the ability to assist with and instantly go to their advisor and know that, such as you mentioned, they’ll present that service proper there. They do not should go to a bunch of various locations, attempt a bunch of various issues, do a bunch of various analysis in the event that they do work with an advisor who has that info and has these connections to assist them get that rolling. One thing else I wish to speak about so far as the ROI of working with charitably minded purchasers is loyalty and one thing we speak about so much at Monetary Planning. I do know the trade is considering it, their thoughts is on it … the good wealth switch and making an attempt to drive better consumer loyalty and connectedness between advisor and consumer.

It appears like a cliche as a result of I’ve talked to lots of people they usually say it, however it’s true. The actual. not transactional relationships which might be gold within the trade proper now as a result of we all know that is going to assist advisors work with subsequent technology purchasers long run and simply preserve them an important a part of these households lives. Or these companies that they is perhaps working with people who wish to give. 

So inform me a bit of bit about that since you talked about with the ability to present that extra asset or that extra worth add so far as charitable planning alternatives. What are you able to be taught while you’re working with purchasers who’re additionally charitably giving? The rationale I ask that query is we speak about alternatives to get to know folks on a deeper degree. And as soon as you discover out what folks wish to assist, I believe that is a fantastic alternative to see what they’re actually all about and what they’re actually keen about. Is that one thing you seen otherwise you’ve skilled your self? 

Thomas Pontius (06:46):
Yeah, I believe it is a fantastic level. On this enterprise, deepening the connection is a time period that usually will get used. How a lot worth are you driving for that consumer? How nicely have you learnt your purchasers? Such as you mentioned, is that relationship extra transactional? Is it, okay, nicely what is the return that my advisor is getting me this yr? Or is it a lot deeper than that? And I believe that is one thing that charitable planning permits for is for you to not simply have a quarterly efficiency dialog, however as you are going by way of the yr, and sure, you are speaking about efficiency, however you are additionally speaking about are we making a charitable donation utilizing certified charitable distributions from required minimal distributions? As we’re attending to the top of the yr, are we having conversations about extra charitable giving? What does that seem like by way of your itemized deductions from a tax perspective? 

So I believe it is simply one other dialog that you simply’re having that then opens the doorways to understanding your purchasers at a a lot deeper degree. And once more, charitable giving is one thing that’s simply very it … it is emotional to loads of purchasers. And once more, attending to know your purchasers on that degree I believe makes their relationship a lot stickier. And I believe it permits you to perceive your consumer actually at rather more than that transactional degree that you simply had been speaking about. It is not simply charitable giving as nicely. There’s so many alternative elements the place these totally different touchpoints I believe actually create a well-rounded holistic relationship and show you how to to get to know your consumer at a a lot deeper degree. And once more, I believe charitable planning is likely one of the planning matters that actually is significant to loads of purchasers, and I believe that is why it builds that retention to the connection. 

Justin L. Mack (08:39):
Improbable. And still have to ask from a private degree, as an advisor, as a planner, as somebody who is happy about doing taxes … however is it good to have a chance to modify issues up and have these sorts of emotional conversations with purchasers? As a result of I think about, once more, alternatives to do this in a method that truly is smart and is pure to the connection you’ve got cast together with your consumer could also be arduous to come back by. Such as you talked about, you are speaking about one thing that’s naturally emotional, I am positive there’s extra alternatives to do this as an advisor. How do you profit on a private degree while you get to have these conversations discover their method into your workday? 

Thomas Pontius (09:14):
Yeah, completely. And the charitable giving dialog can typically be a bit of morbid. Particularly if it is one thing that ‘s a present that is being left on the passing of a consumer or one thing like that. So actually with the ability to go into that dialog and have it’s constructive. Sure, you’ve got created all of this wealth over your lifetime. Do you have got charitable intent on the finish throughout your life? Is there a present that you simply wish to make throughout your life and also you wish to see the advantages of creating that present throughout your life? Or do you wish to go away a sure proportion of your property to a charity on the finish of your life? What’s your relationship with that charity? Why is it that charity that drives you? All of these conversations, I believe for me, add loads of private profit realizing that that consumer might be after these conversations and after placing into place any sorts of charitable trusts. Or whether or not it is one thing even so simple as a donor suggested fund or one thing like that for a consumer the place they are often doing that on an annual foundation or leaving all of it at their passing. 

To me I believe that, one, builds a ton of worth and makes me really feel good that this consumer’s sleeping higher at night time realizing that their plan is in place, serving to give them issues to assume by way of about what charity and why it’s significant to them. These conversations are actually a lot better and heartwarming, particularly being accompanied by the final word dialog of what are we doing together with your wealth while you go. So once more, I believe it takes what is commonly checked out as a morbid and darkish dialog and actually brings loads of gentle to it, which may be very rewarding from my perspective. 

Justin L. Mack (10:58):
Superior. And to type of observe up on that, any recommendation for advisors who perhaps have not had that dialog but? Perhaps they’re on the point of have it for the primary time, or they’re able to shift their apply in a route that permits them to work with charitably minded people and supply these companies as nicely? So they are going into this for the primary time. Something you’ll be able to assist ’em out with as they’re on the point of have that typically robust however in the end rewarding dialog? 

Thomas Pontius (11:21):
Yeah, I believe that the very first thing that I do as an advisor, particularly with new purchasers, is I’ll undergo a tax return. Once more, that is what I do know and I simply go to the schedule and I see, okay, are they taking the usual deduction? Are they itemizing? And in the event that they’re itemizing, what quantity are they giving on a charitable foundation? And if I see that they’re itemizing they usually both aren’t utilizing charitable deductions to itemize, then my subsequent query is, have you ever thought of that? But when they’re, I ask them in the event that they do it on an annual foundation or issues like that. what and why these charities particularly. So I believe that helps open up the dialog. The opposite place that I look is property paperwork. I perceive who’s within the will in belief and issues like that. 

And loads of occasions you will see purchasers that they’ve sure charities listed of their trusts as beneficiaries as soon as they go. And so I believe that is a strategy to open up the dialog and simply speak about one, the quantitative tax advantages … what may it presumably do for you from that perspective. However then two, dive into why are you doing charitable giving within the first place. What’s actually driving you to do this? And for some purchasers it’s the tax advantages that type of drive why they do it in some circumstances. However for a lot of different purchasers, you simply by no means know what kind of relationship that they ever had with the charity. Perhaps sooner or later they had been a beneficiary of that charity and they’re actually useless set no matter any kind of tax profit on giving again to them now the place they’re at in life. 

It is a totally different dialog that takes away from simply the efficiency dialog and it lets you get to know your consumer at a a lot deeper degree. So to these advisors, I might say do not be afraid of that dialog. Go in there confidently. Have some backup with it as to why you are asking the query. However once more, I believe it is a fantastic query to be asking and ought to be requested as a result of I believe at this level, most advisors are most likely that as a chance from a tax planning standpoint and a charitable planning standpoint. 

Justin L. Mack (13:22):
Nice recommendation. And with that, we’re truly going to take a fast break and luxuriate in a phrase from our sponsors. However once we return, we’ll have extra with Thomas Pontius of Kayne Anderson, Rudnick. Keep locked. We’ll be proper again after this break from our sponsor. 

And welcome again to the Monetary Planning Podcast. I’m your host Justin Mack, and we’re diving proper again into our particular dialog this week with Thomas Pontius of Kayne Anderson Rudnick, half one in every of a three-part collection that we’re doing this month. Now, Thomas, we talked a bit of bit within the first half of the present, or truly fairly a bit, concerning the significance of working with people who’re charitably minded, how you can work that into your apply, the enterprise and private advantages of that. So let’s get a bit of bit technical right here partly two of the present. And we do have a tax professional on our arms, so a fantastic alternative to leap into a few of that technical know-how that advisors can use. 

So there have been updates to allowable and commonplace deduction and charitable giving deductions with the Tax Cuts and Jobs Act of 2018, as people know. However perhaps they have not gotten into the weeds and truly picked that aside but. So what do advisors must know? What’s essential with these adjustments and the way can they work it into what they’re doing already with their purchasers? 

Thomas Pontius (14:36):
So theTax Cuts and Jobs Act act primarily doubles the usual deduction. And in that sense, it makes it more durable to recover from that limitation, which at that time in 2018 went as much as about $24,000. It is since been elevated on an annual foundation, prefer it usually has. And so now getting over that quantity together with your one yr state and native taxes and your private property taxes and issues like that, that is capped at $10,000. So now you are still making up one other $14,000 in mortgage curiosity deduction on the primary $750,000. After which the charitable deductions usually are the three. There’s medical bills, certified medical bills in there as nicely, however that has a really excessive limitation to recover from and you do not generally see that. So that you’re actually placing the burden of getting over that degree on the charitable deductions, which typically should be as excessive as 6, 7, 8 to $10,000 a yr to essentially break over that commonplace deduction. 

Now, there are particular circumstances the place you may get the advantage of the usual deduction, but in addition get the advantage of your charitable contributions as nicely. And that is for purchasers who fall into taking required minimal distributions. So older purchasers the place now the required minimal distribution age is now 73, they should take out sure quantities from their IRAs. However they’ll additionally do one thing referred to as a certified charitable distribution as much as $100,000. It used to only be set at $100,000, however now what you are able to do is you’ll be able to take your required minimal distribution, however give a few of that to charity. And that is not counted as earnings to your odd earnings tax functions. However you additionally, on prime of that, can take the usual deduction when you really feel that you simply’re not going to recover from that quantity. 

So there ought to be some dialog together with your CPA and a few kind of evaluation of the place you are getting essentially the most profit. Should you fall into that state of affairs the place you take required minimal distributions and you are able to do certified charitable distributions and in addition get the advantage of this heightened commonplace deduction, try to be doing that. So once more, the Tax Cuts and Jobs Act has made it a bit of harder to recover from that commonplace deduction quantity. However typically there is a method round that. And one other method that has been very useful for purchasers is this idea of charitable bunching. And so actually what that’s, if you’re making a present in a sure yr, however you are falling into this vary the place you realize won’t get that a lot of a profit from a yr over yr. As an example it was $5,000 a yr for 5 years and also you’re simply getting over the usual deduction. What you may do is bunch that 5 yr present into one present $25,000, you may put that right into a donor suggested fund and launch it out at $5,000 at a time. 

And you continue to get the profit within the first yr for that $25,000 present. After all, topic to the restrictions of AGI with charitable contributions. Nonetheless, you are now getting the advantage of the usual deduction within the years later while you’ve gotten the heightened quantities of the itemized deductions in yr one. So there there’s methods round that heightened commonplace deduction quantity. After all there may be the sundown of the provisions from the Tax Cuts and Jobs Act beginning tax yr 2026. So except there may be different laws put in place, we may see that commonplace deduction degree come again down and make it a bit of simpler on purchasers as nicely to be doing their charitable giving. 

Justin L. Mack (18:16):
All proper. Completely. And once more, we’ll have to remain tuned. After all, Monetary Planning is maintaining a tally of that and we’ll be persevering with that protection and such as you mentioned, see how issues change and what advisors might want to know as issues proceed to shift. Anything that involves thoughts so far as potential challenges when working with people who’re charitably inclined that perhaps advisors do not take into consideration till they begin working with extra people who wish to give? Issues that do not come up till you’ve got had that first dialog after which years later when you have got this as a daily factor and then you definately notice that, oh yeah, here is some issues that I discovered alongside the best way. Something stand out to you so far as recommendation that you’d share so far as different challenges, hurdles to clear as you are working with people who wish to give? 

Thomas Pontius (18:57):
Yeah, and I believe one of many issues that is actually come to my consideration has been, one, why are purchasers on the lookout for a monetary advisor? And a few of that point that they’re on the lookout for any person new is as a result of they’ve had some kind of earnings recognition occasion. They offered a enterprise or they inherited a bunch of cash. And going again to particularly with (the instance of) they offered their enterprise. In that state of affairs, they are going to have a really giant earnings tax occasion in that yr. And so earlier than it was usually a dialog about, okay, how are we going to reinvest these belongings? What’s that going to seem like? I believe that could be a excellent alternative to speak about charitable planning as a result of you have got such the next limitation now on how a lot you’ll be able to donate, and you’ve got money proceeds from the sale of the enterprise generally. 

So I believe that is a very good alternative to see that. And I believe loads of occasions folks do not deliver that up instantly within the dialog. And I believe typically it is a problem as a result of I do not assume the enterprise proprietor’s thoughts is essentially there both. However when you’ll be able to present them the advantages of it and quantify from a tax perspective … you may be saving this or we could possibly be organising buildings which might be going to permit for this charitable contribution down the street and that is how a lot profit you get from it. I believe once more, it simply provides a ton of worth and I believe loads of advisors would possibly miss that chance typically. 

Justin L. Mack (20:24):
Nicely mentioned. Nicely mentioned. And I believe, I really like what you mentioned too. It takes us again to, nicely, why are people hiring a monetary planner or a monetary advisor for any purpose in any respect? And I believe what you clarify is only a pure enlargement, I suppose, of the position the advisor performs in say, the lifetime of that consumer. Nonetheless, and I am positive you’ll attest to this, we have seen the position of the advisor type of naturally develop, particularly over the past three to … nicely, actually the final three years. I believe the pandemic has type of signaled for lots of people the significance of getting some type of steerage in monetary issues and understanding that that steerage won’t have something to do with cash on the time. That advisor taking a job that’s as a lot life coach as it’s cash supervisor. And opening this dialog and studying extra about your purchasers on this method naturally does that. However I believe that’s type of the best way we have been going as advisors put on loads of totally different hats than they used to. And I am positive you’ve got seen your hats change fairly a bit over the previous few years. 

Thomas Pontius (21:20):
Oh, completely. It is there. TLike you mentioned, it’s half being a life coach and half being very technically sensible on a few of these issues. However yeah, I imply I believe understanding your consumer at a deeper degree, charitable planning permits you to do this. And once more, that makes a relationship, I believe not solely stickier from the enterprise perspective. However I believe extra rewarding from the advisor perspective as nicely. 

Justin L. Mack (21:51):
Completely. And talking of that rewarding facet of the enterprise, as we shut up right here on the monetary planning podcast this week, we will transition into one thing that has turn into type of a convention, which is closing with some good vibes. And we have talked so much concerning the charitable giving dialog. The way it intersects with the advisor-client relationship. The advantages from the underside line to what’s good for the soul. So when you consider all that, and never simply on this subject, however general I simply wished to ask, what do you’re keen on most about your job and the work that you simply do? We have heard so much about what you type of gained simply by being somebody who may be very keen about doing taxes. Once more, a uncommon trait. However it sounds prefer it’s been a trait that has allowed you to essentially present nice worth and luxury and peace of thoughts to the parents that you simply work with. Particularly round this subject. This actually massive subject of charitable giving and one thing that is not simply understood. It sounds so simple as, hey, I simply wish to give. However purchasers perceive that it would get so much trickier than that. Particularly if you end up one in every of these excessive web price or ultrahigh web price purchasers the place it is not as straightforward as simply I wish to give. That is it. And advisors assist with that. So when you consider all the assistance you’ll be able to present, what stands out to you as your favourite factor concerning the work you do? 

Thomas Pontius (23:05):
Yeah, and I believe on the time that you simply’re giving recommendation and issues like that, it might sound a few of these occasions are by no means going to occur. I discuss to purchasers so much about who’s going to go first and issues like that. When these issues truly materialize they usually occur. And it’s a very troublesome time for surviving spouses and issues like that. However you’re oftentimes the primary level of contact that they are going to speak about, so what will we do now? And though that is a really robust dialog in that second with any person who’s clearly going by way of a grieving course of, the quantity of worth which you can present to purchasers in these conditions, it is invaluable to them. And that is the place I actually get pleasure from this aspect of the enterprise, is being very personally related to my purchasers that they see me as that a lot of a trusted advisor. And I take loads of pleasure in the truth that they’re coming to me and asking me these questions and I am serving to present the perfect options, essentially the most artistic options, and actually serving to them enact these options to in the end assist them sleep higher at night time. And that is actually what I really like about this enterprise. It’s so people-oriented. I really like working with folks and in addition on the identical time actually serving to them navigate their monetary path. 

Justin L. Mack (24:24):
Improbable. Nicely, we hear the eagerness in your voice, and thanks a lot for sharing a bit of little bit of ardour with us this week on a particular version of the Monetary Planning Podcast. Thomas, thanks a lot to your time this week. 

Thomas Pontius (24:36):
Yeah, it was nice. Thanks for having me, Justin, and actually respect the dialog.

Justin L. Mack (24:40):
And I wish to thank everybody for listening to the Monetary Planning Podcast. This episode was produced by Arizent with audio manufacturing by Kevin Parise. Particular thanks once more to our visitor, Thomas Pontius of Kayne Anderson Rudnick. Charge us, evaluate us and subscribe to all of our content material at For Monetary Planning, I am Justin Mack. Thanks for listening.

This podcast is sponsored by St. Jude Youngsters’s Analysis Hospital. Data shared on this podcast is meant for instructional functions solely and doesn’t exchange unbiased skilled recommendation or judgement. The statements of truth and opinions expressed herein are these of the authors and, except expressly states on the contrary, aren’t the opinion or place of the sponsor or any member of the sponsor group.