There is a philanthropy knowledge gulf in the UK’s financial sector, which is preventing financial advisers from engaging their clients on philanthropy despite a clear and growing demand for philanthropy services. As a result, clients are missing out on key products, services and advice which would allow them to meet their ambitions of having a positive impact with their money. This is doing harm by putting clients off philanthropy, and often leaves them to give in less effective, rewarding and fruitful ways. And as a form of investment, it leaves philanthropy as a bizarre outlier. People rarely invest tens of thousands of pounds in a house, a car, stocks or bonds, without expert advice, support and information. Yet they are left to invest similar sums in organisations tackling cancer, poverty or climate change, often without any equivalent support.

By failing to offer philanthropy services, firms too are missing out on valuable opportunities to build relationships with their clients and their clients’ families, and so are failing to grasp the financial benefits which can follow. The UK’s financial sector overall is missing out on the chance to get ahead of the competition and cement an innovative, trustworthy offer to the next generation of wealth coming through, while countries like Ireland and Australia break away to do so. Meanwhile, the opportunity to raise potentially vast sums for good causes is being wasted too.

The philanthropy knowledge gulf is so significant – and the difference between philanthropy services on offer from the financial sector and the demand from clients for informed advice so substantial – that bold steps are needed to close it.

Philanthropy services have developed at a torpid pace over the past decade, demonstrating that the financial sector will not move quickly enough to respond to demand on its own. There is a passive resistance among many advisers to the concept of supporting their clients to ‘give their money away’ – even if that is the client’s clear wish – which will not be overcome swiftly by gravity alone. And philanthropy services have, in essence, been rationed to the super wealthy, despite the introduction of the Consumer Duty and the fact that people with all levels of wealth would benefit from support with their giving. This creates a clear impetus for action by the regulator, while the increasing focus on philanthropy services by international competitors requires a sense of urgency from the sector’s leadership.

The Financial Conduct Authority (FCA) should act swiftly to overcome this philanthropy knowledge gap, by taking five steps:

1.       Requiring the addition of philanthropy to the curricula of qualifications, such as the Diploma in Financial Planning, the Investment Advice Diploma (IAD), and the Chartered Financial Analyst (CFA) Program.

2.      Adding philanthropy and the full spectrum of capital to the continuing professional development (CPD) requirements of retail advisers.

3.      Including philanthropy in any changes to training, competence, leadership, culture and incentives made as a part of the FCA’s intentions to improve advice on sustainable finance.

4.     Working with the accredited bodies and philanthropy sector to develop and drive take up of a philanthropy CPD course.

5.      Emphasising that meeting client demand for impact solutions, and philanthropic solutions in particular, is part of the Consumer Duty.

All of these actions require close partnership working between the regulator, the financial sector, philanthropy specialists and the accredited bodies.

By taking these five practical, proportionate steps together, the FCA will be able to bridge the philanthropy knowledge gulf, and so remove the barriers which are preventing the UK financial sector from consistently providing high-quality philanthropy services to all clients who would benefit from them. The UK could build on its success as a world-leader in asset management by becoming a world-leader in philanthropy services; getting ahead of the competition striving to attract the next generation of wealth by offering trusted, genuine, impactful new ways to make a difference; and in the process it could generate hundreds of millions of pounds for good causes much in need of an influx of cash. 

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