Hannah: Well, thank you, Arlene, for joining us today.
Arlene: It is a pleasure to be here.
Hannah: Now you are a speaker, an author, a CFP, and I’m fascinated kind of with what you’ve done with your CFP and kind of how you used your experience with the clients to kind of launch into this world of philanthropic giving, and kind of what you’re doing in that. But before we dive into that, I’d love to hear more on your path, and kind of how you got to where you are today.
Arlene: Oh, thank you. It would be delightful to share that with you. And it’s an interesting path and it’s not straight at all. I hope everyone is sitting in their seats and ready to follow my interesting path to where I am today.
Arlene: I started off in the trust and investment world on Wall Street. And it was so much fun. It was back in the ’80s where people were greedy. And we were growing money and preserving money. We had three martini lunches back then also. But ultimately, I met my husband and we had two daughters. And I realized, having two daughters, that while I loved what I was doing on Wall Street and it was interesting, I had the unfortunate experience of the glass ceiling, sexual harassment, and wage discrimination. Now having two daughters, the last thing I wanted for them for was to experience any of this BS and I thought, “How can I lead by example to show them that they could be successful, and be paid well, and have a fulfilling job?” Right?
Arlene: So, my husband and I moved from the East Coast to Portland, Oregon, because my brother-in-law and sister-in-law were out here. And we thought it would be great for all the cousins to grow up next to each other. And I stayed home for a couple of years. And when it was time to go back to work, I saw a career coach, because I couldn’t imagine going back to work for a large financial institution again. It just didn’t seem right, especially if I wanted to lead by example for my daughters. And when I was at the career coach, we went through all these amazing activities, all those personality tests, and leadership styles, and what do you like about an organization. And ultimately, we ended up that she told me, “Philanthropy and benevolence is where you belong.” I looked at her and I’m like, “You’ve got to be kidding me. How do you make money at that?”
Arlene: Because I was used to making money hand over fist and doing well, and everything I knew about non-profit work had to do with you were passionate and you got paid next-to-nothing. So here I am in Portland, Oregon, and I jump right back into the trust and investment world. But instead of those large financial institutions, I worked for a couple local and regional organizations, and networked for five years. That’s it. I said, “Five years,” before I found a position with the Oregon Community Foundation. And it was a fundraising position. And since it’s the largest non-profit in the state of Oregon, and the sixth largest community foundation in the country, I got paid a decent salary. One that I could say, “I can do this and makes sense to me.” And I spent nine years there, with a dream job. And during that time, my sole focus was working with professional advisors to educate them on the benefits with partnering with a community foundation for their clients giving.
Hannah: Were you already a CFP at this point?
Arlene: Oh yeah, I’ve been a CFP since the ’90s. I’ve been a CFP for a long time. And I became a CFP because I had held my Series 6 and 63 and 7. And at the time, I left the brokerage realm in New York City, banks could not hold securities licenses. So when I transitioned from brokerage to banking, I wanted to have a designation that would not expire, that didn’t have to be housed somewhere, that I could carry with me and kind of put my shingle anywhere I went. And that’s the beauty of the CFP. It doesn’t have to be affiliated with another type of organization. So yeah, I’ve been a CFP long time.
Hannah: You decided to leave and where did you transition to next?
Arlene: I transitioned next to my own company, because when I was with the Community Foundation, and advisors would send all their clients to me because it was a neutral charity, many wealth managers, CFPs, people who are doing financial information for their client would say, “We love you, Arlene, and the Community Foundation, but I’m never going to refer a client to you because I lose the revenue stream. If they give this gift, I lose the revenue stream.” And what I realized at the Community Foundation was it didn’t have to be that way. The statistics say that 60-90% of your client’s children or heirs are going to fire you within the first year of their passing, because there’s no relationships that exist between the advisor and that next generation.
Arlene: So I put together my skills and abilities and said, “Well, heck! If we teach advisors to engage with their heirs of their clients now, and build that relationship now, when their client dies, it’s a natural that the adult child will want to stay with them. So let’s focus at how do we start to build that relationship now.” And it’s very clear that philanthropy, I’m talking about values and life lessons and stories, allows you to engage the next generation in a powerful and meaningful way that benefits the client, the community, and the bottom line of the advisor.
Hannah: As a younger planner in the profession, I’ve heard a lot of conversations about how do you reach the younger generation. How can you work with the children of your clients? And I’m not sure if I’ve ever heard it explicitly talked about by using philanthropy as a way to really be engaging with that group. So how does philanthropy help engage with that younger generation?
Arlene: That’s a fabulous question. And what statistics and research shows us is that successful families, families that have passed down wealth through generations, your Rockefellers, your Carnegies, is they focused on something greater than themselves, something outside of the family. So they passed down their values, their life lessons and stories, and engaged their children in things that are just bigger than our vacation in the Hamptons or on the coast or whatever that is. So by engaging the generations in important things, like what are the core values that run our family, what do we want to be known for, how do we want to make an impact in the world, that most successful families that have been doing this for generations are the ones that keep their wealth, because they come together for a bigger project, a bigger thing than themselves. And that’s why philanthropy is a great way to engage the next generation.
Hannah: I hear you talk about the Rockefellers and these very, very large families. And I love that idea that these principles can be used in other families. Is this only for millionaire clients?
Arlene: Great question. Absolutely not. And my book can show you that, Give to Live: Make a Charitable Gift You Never Imagined. I talk about how to pass down these values and life lessons and stories through vehicles called a donor-advised fund. A donor-advised fund is a mini-private foundation, that’s umbrellaed under a larger charity, like a community foundation, or the larger wire houses, Schwab, Fidelity. They have their own charitable arms. Where you put in a small amount of money, and you can start to engage multiple generations, and making grant recommendations on where that money should go. So you don’t have to be a multi-millionaire. You could be mass affluent or even of modest means to create a donor-advised fund and start passing down those values, life lessons, and stories.
Hannah: So tell me of how you’ve seen families engaging this. Because what I’m hearing you talk about is we have these stories and these values and you’re taking those things and blending it with money, which is really what we do as financial planners. What great financial planners do, is what I should say. And so, I’m curious, can you give an example or stories of how this plays out or how you’ve seen it play out with clients?
Arlene: Well, I can see it multiple ways. But I think the most powerful story I can share is that of my own family and how my parents have taught that and we have taught our children. So nine years ago, my mother was diagnosed with pancreatic cancer. And we’re talking on the phone and she’s like, “Honey, I only have six to eight months to live.” She was living in Florida at the time. And my sister was in Rhode Island and my brother and I were in Portland, Oregon. And we took turns going down to visit her. First time I went down to visit her, “Bubby!” She used to call me Bubby, that was her pet name for me. She picks me up at the airport, “Bubby, when we get home, I want you to check out all the documents the attorney made and make sure after charity, it’s split equally between the three of you.” And we get to her home, and I’m pulling my suitcase into the bedroom, and she’s running at me all of a sudden with a stack of documents, “Here you go, Bubby, look at them.”
Arlene: So I’m like, “Mom,” I got a glass of water. I sat down. And after charity, everything was going equally between my sister, my brother and myself. But I noticed that only 5% was going to charity. And what was remarkable about that, Hannah, is I was already in my late 40s and I’m the youngest. And I didn’t need the money. And neither did my brother or sister. So, I asked her, “Mom, why only 5%?” “That’s a lot of money, Bubby! That’s a lot of money.” But my sister, brother, and I encouraged her and she increased her charitable giving from 5% to 10%. And you should have seen the joy on her face. There was so much energy and excitement and passion within her, that she was making these gifts. And it was a joy to be able to help her facilitate these gifts in the end. And there’s real hard science, Hannah, about giving money to charity and happiness.
Arlene: So I’m going to sidetrack a little and tell you about two studies. One is with Michael Norton, who’s an associate business professor at Harvard. He actually has a great TED talk on how to buy happiness. And it proved, and Pew Research did some followup research around the world in 136 countries with over 200,000 people, that giving money to others provides more happiness than spending it on yourself. So as an advisor, if we can help our clients find happiness and joy by separating some of their money to make a difference in the world, have a bigger purpose, allow our clients to self-actualize, we’re adding more value to our clients. We’re adding into their personal goals of happiness, taking care of family. And then we’re layering on that financial happiness and well being. And we’re allowing them to create a legacy and make a charitable gift that they never imagined.
Hannah: I love that study. And I love that idea of giving money can bring so much happiness. And again, it’s how does money intersect with people’s lives. I mean, that’s what we do as financial planners. You’re talking about end-of-life gifts, but this doesn’t have to be huge dollar amounts, right?
Arlene: No, it doesn’t. And let me continue with my family’s story. My mother had this extreme joy at the end of her life. And we took turns going down to Florida. And one time, I was visiting her and she says, “Bubby, what are you going to do with the money?” I’m like, “Mom, the inheritance?” She’s like, “No, the money.” She was very direct. And I’m like, “It’s really simple, Mom. I’m going to take the family to Israel,” because we’re Jewish and that was an important thing for my mom that we go to Israel. “I’m going to create my own donor-advised fund to share giving with the family. And the rest will go towards the girls’ college education.” So we went to Israel. It was an amazing trip. And we created a donor-advised fund. And it was at the Oregon Community Foundation, which is where I was working. And the minimum account fund size was $25,000.
Arlene: Now my mom, wasn’t worth a lot of money, but was almost up there with the millionaire next door, and split three ways, a couple hundred thousand dollars. When I created that fund, my husband and my two daughters sat down and we started to have the conversations that passed down values, life lessons, and stories that profoundly changed our lives. We’re sitting with our donor relationship officer at the Community Foundation, and she asked us, “Would you like to be invested in the main investment pool or the socially-responsible pool?” And our youngest daughter, Abby, perks up and she’s like, “The socially-responsible, of course.” And my husband and I looked at each other and smiled, and we were so proud of her for being participatory and having an opinion and helping us grow.
Arlene: Then we went to make our first grant recommendation. And the schools here in Oregon, they all have a foundation or a non-profit, and they give you suggested donation amounts to ensure that their full-time teachers and their extra-curricular activities. And my husband and I were ready to make our first grant recommendation, and we were being very perfunctory, like, “Okay, we’re going to make the grant to the high school in the required amount.” And as we’re about to sign the paperwork, our oldest daughter perks up and says, “Mom, Dad, why would we give to Lincoln? It’s a wealthy school. There are schools in greater need for this money.” And my husband and I looked each other, got big smiles on our faces, and had to agree with her. So we gave to both. We gave to Lincoln and a school in greater need. So we started to develop, immediately, this new appreciation for the compassionate kids that we had raised. And at the time they were bat mitzvah age, like 13, 14, 15 years old.
Arlene: And every year since then, we get together and we discuss each year where we want that money to go. And what are the key values that we are expressing in giving in the community. And that’s with a $25,000 fund. So that could be a $5,000 fund or a $100,000 fund. You can have those conversations now. And as the financial advisor, you have the opportunity to encourage that with your clients, and then sit there with your clients and facilitate a values discussion with them. What are the core values? What are the causes they care about? And if you’re not comfortable doing it, call me, and I’ll come do it for you. Because I love doing it! And you can sit and watch and you’ll get to know your clients passions, their pain points, and it will bring you to a whole new level of working with your clients.
Hannah: As a planner in my practice, I have conversations with clients about donor-advised funds and we’ve set up a handful of them. But I don’t know if I’ve ever had the conversation about making it a family event, or a family experience, rather than just usually my clients. So it’s really interesting to me to hear you talking about donor-advised funds within more of that family context. Is that really the trend of what you’re seeing in these donor-advised funds?
Arlene: It is becoming more and more common to use donor-advised funds to interact with multiple generations. Just like private foundations do, and they have maybe executive staff or hire someone to come in and do that. You can do the exact same thing with donor-advised funds. And depending on the size of the donor-advised fund, it’s usually about $250,000, you can set up a donor-advised fund for your client at the $250,000 level and still manage the money in that fund for your client, so they have the comfort of already knowing, liking, and trusting your investment expertise, and using that money to engage, not just one generation, but maybe even two or three generations. And there’s lots of tools and techniques that we can use as advisors to do that, either individually with one family, or perhaps at a special event where you have a couple families sitting around and you’re going through these activities, and their discovering their values, and what they want to support together. It’s a very powerful tool.
Arlene: And you don’t have to be the multi-millionaire with a private foundation. You can do it with a donor-advised fund and the advisor can lead that conversation, or like I said, I can come in and help facilitate those for you. The families come together and learning about each other in new ways, and you as an advisor learn so much more about what makes them tick. And the more you learn about what makes them tick, the stickier they become in terms of assets under management.
Hannah: A lot’s been said about how millennials’ philanthropic endeavors are different than the boomers, if you would. Could you talk a little bit more about what you see as a difference between the generations in how they approach giving?
Arlene: Yeah, so there is complete differences between boomers and millennials in giving. Boomers, a lot of us have been in the sandwich generation where we’re supporting parents and our kids, and we’re looking at our own retirement. We want to have a lot of control in our giving. And millennials want to have more direct impact and direct focus and participation on the giving. So I think when we look at engaging millennials with the boomers, there’s a lot we can learn from each other. And having different activities and exercises to draw out what’s important at each generation in how one is giving, really helps you design communication within the family, and helps you to understand what your client, as well as their children, want more. Does that make sense?
Hannah: No, absolutely. And one of the things, too, as a donor-advised fund, I mean it’s great for high-income earners. Having to wait to get the benefits after you die, if you would, for a lot of the giving, you can start doing it now.
Arlene: Exactly. Donor-advised funds are amazing tools, where you get a tax deduction right away and you can, depending on how you set it up, give it all out, or give it out over time. When we look at our new tax laws, some people are doubling up on their giving, but they don’t want to give it out right to the organization and say, “Oh, I’m going to give this year, skip next year, and then give again.” I mean that’s tough on an organization. But as advisors, we can say, “Yeah, give it all this year, and then give it out over a few years from the donor-advised fund to those organizations that you want to support, and then that way you don’t overwhelm them with a gift, or make them think you’re going to be giving that amount every year.”
Hannah: Right. A lot of the philanthropic conversations, you’re seeing them stem out of a deep values conversation with clients, is that right?
Arlene: Yes, that’s where it all starts.
Hannah: And so, for somebody who isn’t as comfortable with that, or is working at a firm where maybe that’s not the culture of the firm to be having those conversations, what would you recommend in that situation?
Arlene: Well, I better watch myself here. If your firm doesn’t want you focusing on your clients’ values, I would question if that’s the right firm for you, personally. Because when I look at any conversation around money and planning, it all stems from your core values. Whether it be integrity, or sustainability, it’s all core values that drive investing and financial plans, plus your charitable giving. I think every conversation when you have a new client, stems from the core values of your client and what they want to represent and what they want to become. And some of us are better at that conversation than others, but a lot of it is are the same questions that we’re already asking with our client intake forms, but drilling down deeper. For example, I noticed that you sit on the board or volunteer for the Boys and Girls Club, or the hospital, can you tell me why this organization? Tell me more about that. And you’re going to hear the stories and the values that they have that are really critical to who they became, the career they took, why they’re sitting on that board.
Arlene: And it just allows you to know your clients in profound ways, where they’re going to feel heard and appreciated more, and like you understand and know them better. And the deeper the client relationships are with our clients, the more sticky it becomes, because, as an advisor, you and I both know we can’t distinguish ourselves based on returns alone. There isn’t real differences between returns. We have modern portfolio theory, and this person invests in individual stocks, and this one’s diversified in mutual funds. But the returns are pretty much all competitive. So it boils down to relationships, the relationship business. And the more we are in relationship with our clients and their children, the more we’re going to succeed for them personally, as well as for our firms. And we’ll like the people more, because we know them better. So we’ll do a better job for them.
Hannah: So you’ve written a book, and your book is Give to Live. And one of the things that you’ve talked about, you’ve even mentioned it on here, is this phrase, a gift you can’t imagine. Is that what it is?
Arlene: Yeah. Make a gift you can’t imagine.
Hannah: Make a gift you can’t imagine. When I hear that, I’m not quite conceptualizing it. Are you finding that clients can give more than they ever thought they could, or what does that mean to you when you say that?
Arlene: Well, when I wrote the book, a lot of the people I heard on the trusts and investments side and in the non-profit world, is that people were stuck and thought they couldn’t make a gift because of fill-in-the-blank. I have a loved one I need to take care of. Everything’s in my business. They had all of these issues that would stop them from making a gift. And what I realized is most people, most clients, really don’t understand how to make a gift. And most advisors don’t break it down far enough for people to understand how to make a gift. Now for most of our clients, they can’t give, during their lifetime, big charitable gifts because they need the money to live on during their life. And that’s okay. So one of the things I teach, when I say, “Make a charitable gift you never imagined,” was how to endow a gift that you make annually. So, Hannah, tell me a charity that you give to every year.
Hannah: We give to our church. We also give to some non-profits that do different work internationally.
Arlene: Okay, so let’s use your church as an example. I’m going to use nice, round numbers because it’s always easier when we do the math. Let’s say you give $100 every year to your church. It could be more, it could be less, either way, it’s good. They do good work. When you die, they’re not going to receive that $100 anymore. But you can endow that $100 and make a gift that will give back that $100 in perpetuity. Would you like to hear how to do that? And it’s really simple.
Arlene: So take that annual gift, and you multiply it by 20, so $100 times 20 is $2000. If you leave a $2000 bequest to your church for their endowment, when invested properly, that’s a 5% payout to that church in perpetuity. It’s that simple. And that’s a gift you never imagined you could make, right?
Hannah: Well, and I just love how you’re framing it out too, of even how you have that conversation of… Yeah, even just now, I’m like, “Oh, yeah, forever.”
Arlene: It’s that simple.
Hannah: Forever’s a long time. I like that.
Arlene: And it’s that simple. And then here’s what I layer on, a bequest means you actually have to go pay a lawyer to draft a will. So let’s eliminate that, because that costs money. Let’s put a $2,000 beneficiary designation to your church, which not only eliminates the attorney fee, but it’s a more tax efficient asset to give, because the heir who gets a distribution would have to pay income taxes on it. So this way, the charity doesn’t. So you’ve avoided another tax and you didn’t have to pay an attorney, so you’ve made an efficient financially sound gift to your church in perpetuity. And if it’s $10, and you’re making a $200 gift, or a $100,000 and you’re making a $2 million dollar gift, you can endow that in perpetuity. And it’s that simple. That’s what I mean when I say you can make a charitable gift that you’re never imagined. How many of our clients do you think would want to learn that formula and be able to find their passion and make an endowed gift they never thought would be possible?
Hannah: Well, that forever word, in perpetuity, that’s a selling point for sure.
Arlene: Mm-hmm (affirmative).
Hannah: So when advisors really embrace kind of what you’re talking about with this philanthropic giving, how is that impacted their practices? Does this resonate with all clients?
Arlene: I does resonate with most clients. And that’s because you’re helping your clients with comprehensive planning that sounds personal, financial, and legacy problems, where you’re bringing them to a higher level where they’re able to self-actualize finding purpose in their giving that they never thought possible. And people want to be satisfied. They want to self-actualize. They want to make a difference. So it resonates highly with clients and they tend to refer more clients, because it’s such a powerful experience. And they’re not just focused on, “What were my returns this week?” But, “How can I make a difference with my money beyond my family?”
Hannah: One of the topics I know that you talk about is integrating philanthropy into your life. And so I’m curious, how can financial planners, how can we integrate philanthropy into our own lives? This is a value that’s important to us. I mean, obviously the giving, but I’m curious what other thoughts that you would have on that.
Arlene: Besides just financially giving of assets of cash, marketable securities, whatever, volunteering and showing up with your time and your talent is huge. And it’s leading by example for our kids. And it’s true the saying, “What you give, you get back tenfold.” I think a powerful way for advisors to incorporate it into their life is incorporating it into their practice by letting your clients know where you’re showing up and who you’re volunteering and making a difference with. People want to know that you’re human and you’re not just this mechanical investment person. And I guess we have those now with robo-investing. But being authentic and showing them who you really are also breaks down barriers with your clients so they can really see who you are and resonate with you more in terms of who you are in the world, not just who you are as a financial advisor.
Hannah: That’s such great advice, and it can often be, I know especially at the beginning of my career, that was always a very scary proposition of doing that, but I think it’s absolutely solid advice.
Arlene: It’s amazing when you let your guard down and let people in, what’s possible in what you can create and what families can create and how that really bonds you together in the world and in your community looking out for other people and taking care of others.
Hannah: What would your advice be to new planners who are just entering the profession right now?
Arlene: First of all, it’s a fabulous profession to be in. I think helping people with their finances is so rewarding because you set them up to succeed in their life. And it’s extremely important that new planners take the time to educate their clients and their clients children, whether it be budgeting or credit scores, whatever it is. It’s an extremely rewarding career. And I would say, get involved in the professional organizations that resonate with you. For example, I’m involved in our state planning counsel, our FPA, and our planned-giving roundtable. Because you will make the professional connections that will enhance your practice, and you’ll be able to refer people and that’s where business gets done. You can’t do it yourself. You’re going to need an estate planning attorney, a CPA to refer to.
Arlene: So become active and involved in those professional organizations that you will make the connections that will bring you to the next level. First, show up. See if you like them. Then get involved on the planning committee or the board. And those relationships will serve you forever once you find the groups that resonate most with you. So don’t be shy. Don’t keep your head under the desk. Go out and get involved early and often, but make sure they’re people you want to hang out with too.
Hannah: Because it should be fun, right? This should be fun work.
Arlene: Absolutely. Fun is actually one of the acronyms I use a lot. Flow, unique, natural. The flow of money, the unique proposition of your firm, and it’s a natural process that your clients are going to want to give money to make a difference.
Hannah: You became a CFP and now you’re in charitable consulting, and that world. For somebody who is entering the profession right now, and is hearing your story, hearing the work that you’re doing with advisors and clients, and it’s just like, “Wow, that would be my dream job.” What would you tell them?
Arlene: Well, first you have to have the expertise under your belt as a planner. It takes a lot of hard work to transition and figure out what’s right, so go out on an informational interview. And figure out which niche you want to connect in, because there’s so much opportunity with a CFP designation or as a financial planner. There’s so much opportunity. You could really do anything you want because sped up the discipline of how to invest, how to have conversations, the emotional intelligence. You learn so much in this profession that you could really do whatever you want. So just, research, interview, try it, if it doesn’t work, try something else. It’s kind of what I did. And know that there’s going to be failures and you fail your way forward. As long as you’re growing personally, work will help, whether it be through the professional organizations or privates coaches. It’s great.
Hannah: Is there anything else that you want to be sure to leave our listeners with?
Arlene: Yes, so just to highlight my book, Give to Live: Make a Charitable Gift You Never Imagined, was written as a tool for financial advisors to use with their clients. First it tells my story about my mom and giving. And then, I really break giving down into bite-sized understandable pieces. What’s a bequest? What’s a beneficiary designation? Giving during your life and through your estate plan. And it makes it understandable, so you don’t have to spend an inordinate amount of time teaching your clients how to do that.
Arlene: The second section shares a bunch of great stories of amazing people that I had the pleasure of helping create a charitable gift that solved a complicated family situation that was financially sound, and they were able to make a gift they couldn’t imagine. And it’s broken down like, “Single. Dual-income, no children. Business owner. Multi-generation.” So you can skip ahead, see which one resonates for you, or you can read through all of them. But after each story, there’s an area for your clients to start their own philanthropic plan with a personal reflection.
Arlene: What are the key values that they care about? Who’s going to be involved in the grant-making? Is it everyone in the family or just a few people? What are the main causes you care about? It breaks all of this down so people start that philanthropic plan. And the last chapter points them right back to you as the financial advisor, because next to a spouse, that financial advisor is going to make or break that gift. And that’s why I’m teaching advisors that by engaging the next generation, we’re going to work on retaining 90% of the assets and letting 10% go to charity. So it’s a win-win for everyone, the client, the community, and your bottom line.
Hannah: And your book, you can obviously Google it, or go to the show notes where it is at right now.
Arlene: Right. It’s on Amazon.
Hannah: Well, thanks so much for joining us Arlene. We really appreciate it.
Arlene: It has been a pleasure. And anyone who wants to reach out, give me a call. I’d love to talk and see how I can help you and your clients.
Hannah: Great, thank you so much.
Arlene: Thank you.