Finding Your Middle Class Millionaires. Wednesday, April 29, 2015

Transcription

1 Finding Your Middle Class Millionaires Wednesday, April 29, 2015

2 Our Presenters: Harold Pinkham: Principal & Co-Founder, ActivateLegacy Ron Ware: Principal & Co-Founder, ActivateLegacy, President & Personal Legacy Advisor, Wealth Impact Partners

3 Think Different!

4 Meet Bob a Middle Class Millionaire: Actively involved with Organization for 30+ years, served past 10 years on Executive Board Loves Organization!! Children greatly benefited from the Organization Program guy, not a fundraiser Annually gave $200

5 What About Bob? Not on anybody s radar for a major gift. About to retire and attended an Estate Planning workshop we hosted to members/donors of organization. Bob and his wife met with CFP/Legacy Advisor because they were concerned they didn t have enough for retirement.

6 Bob & His Wife discovered: They were going to have excess wealth which they didn t plan to spend on themselves or want to give to their children. They discovered they could create/provide legacy gift that would reflect their deepest values.

7 Four Months Later.. They announced that they plan to leave the Organization over $1,000,000!!!

8 How did this happen??

9 The Millionaire Next Door: A landmark book by Thomas Stanley & William Danko

10 Who are they? They don t look like millionaires. They don t dress like millionaires. They don t eat like millionaires. They don t act like millionaires.

11 The Millionaires in Your Organization: Two-thirds are self-employed. Only one in five is retired. 57 years old; married with three children. Almost never divorced. Spouse is equally or more frugal Serious budgeters.

12 The Millionaires in Your Organization: 97% are homeowners. 50% have lived in the same house for more than 20 years. Most live in middle-class neighborhoods. Their homes valued around $320K.

13 Millionaire Spending Habits: Frugal, Frugal, Frugal! 50% would never spend over $350 for a suit. 50% would never spend over $140 for a watch. Most hold Visa/MasterCard instead of American Express.

14 Millionaire automobiles: 81% purchased their vehicles outright. 59% spent under $35K for their vehicle. Only 23% own new vehicles. Most autos are over 4 years old. F-150, Explorer, top choice.

15 Millionaire Businesses: Self-employed: They make up less than 20% of the work force, but account for 66% of all millionaires. Dull normal businesses: welding contractor, farmer, plumber, HVAC, dentist, accountant, pest controller, etc.

16 Millionaire Businesses: Cash Poor: much of their realized income is invested in assets that tend to appreciate in value without generating realized income (i.e. 20% home equity, 20% retirement, 20% business) Self-employed: 75% are entrepreneurs; others are professionals (accountants, lawyers, doctors, etc.)

17 Millionaire Businesses: 91% never received, as a gift, as much as $1 of the ownership of their business. Less than 20% will turn their businesses over to their children.

18 The Millionaire Entrepreneur: Most will require planning to unlock assets for philanthropy. Only 3% have plans in place. Few are prospected by nonprofits. They are the core business of many financial advisors.

19 Millionaire Net Worth: Of the 8.4 Millionaire families in US only 6% have net assets worth over $10 Million. Average $3.7 million. Typical $1.5 million (median).

20 Most Don t Consider Themselves. Wealthy! With Assets between $1 5 Million UBS Wealth Management Study

21 Assets Over $5 Million With Net Assets over $5 Million UBS Wealth Management Study

22 Millionaires Biggest Concerns: What Keeps Them Up At Night? Running out of money 88.3% Rising medical costs retirees experience a much higher rate of inflation due to medical costs. Living longer average lifespan continues to increase.

23 Millionaires Biggest Concerns: 1. Heirs 79% 2. Medical costs 77% 3. Retirement income 71% 4. Kids/Grandkids education 48% 5. Being sued 47% 6. Losing job/business 40% 7. Personal security 28% 8. Parents care 28% 9. Gifts to Charity 27% Prince & Associate Survey

24 Summary: Over 8.4 million Millionaires in U.S. Over 13 million are worth $500K - $999K. Most don t think they re wealthy. Few have done little, if any, financial planning.

25 So what s an organization do to?

26 A New Approach The Excess Wealth Conversation With Your Donors

27 Every gift begins with.. a conversation. But getting a gift from a MCM requires a much different conversation

28 MCM Donor s are looking for Financial Clarity and Confidence with their future. Privacy as they discover their true capacity. To be inspired not confused.

29 The Excess Wealth Conversation is a focus on Donors needs first!

30 It is holistic, deeply personal, and authentic conversation. thoughtful conversation exploring a donor s philanthropic intent.

31 It is.. strategic approach to assessing a donor s financial capacity and philanthropy intentions. an invitation to plan at a new, exciting, and deeper level: If you knew you could, wouldn t you?

32 What it is not. It is not focused on your organization s needs. It is not an ask for a gift It is not guided or conducted by staff.

33 It is not focused on tactics (i.e. Charitable Gift Annuities, CRTs, etc.) an advisor selling a financial product. a solicitation for business.

34 Questions they want be asked: Concerns & Financial Independence

35 Conversation Starters: What keeps you up at night?

36 Concerns: Is there anything that you are concerned about for your spouse, your children or grandchildren?

37 Concerns: What are you up against with your children?

38 Financial Independence: Do you feel you have enough money to live comfortably for the rest of your life

39 Financial Independence What would have to happen for you to say you feel confident about your financial independence?

40 Family Legacy: What s Your Story? (Your parents, childhood, spouse, kids, your dreams)

41 Family Legacy: What values do you hope to pass on to future generations?

42 Family Legacy: If your family had a crest what would it be?

43 Family Legacy: Why do you want to leave money for your kids? How wealthy do you want them to be? Why?

44 Capital Legacy: What in the world would you like to change or preserve?

45 Capital Legacy: Tell me about the most meaningful gift you ever made? Why was it important to you?

46 Capital Legacy Do you serve as a volunteer or serve on any nonprofit board? Why? What led you to give your valuable time to the cause?

47 If given a choice. Would you rather be a Involuntary or Voluntary Philanthropist?

48 If You could do More that Matters without it effecting your retirement dreams, or family legacy.would you?

49 Case Study: The Man who couldn t pronounce Philanthropy.

50 As an Organization Focus on donor concerns, become Donor- Centric! Create a Philanthropic Advisory Council (PAC) to help donors begin the philanthropy conversation Use your PAC to provide valuable educational resources that address their concerns. Demonstrate leadership/show them that you care about their issues!

51 Create Your Planned Giving Dream Team!

52 Create a Philanthropic Advisory Council (PAC) 25-40% of most nonprofit supporters work in the financial industry. These are the attorneys; accountants; financial planners; insurance professionals; bankers, investment bankers; etc. connected to your organization. Recruit and train them to help your organization.

53 Have them: Help produce educational events and materials that inspire your Middle Class Millionaire donors Help create a Gift Planning culture within your organization.

54 Leverage their expertise to address donor concerns: Estate Planning Small Business Exit Strategy Elder Law/Medicaid Planning Health & Long Term Care Insurance Retirement Income Planning Asset Protection

55 As a result, you generate: Appreciation and trust from donors who feel valued and understood by your Organization. Significant follow-up conversations among donors and PAC members. Interest in Gift Planning strategies and opportunities as donors seek to create impact through your Organization s work. WIN WIN WIN

56 Growing Trends: Nonprofit staff s involvement in helping donors to make charitable decisions: 2006: 41% Today: 29% More and more donors are consulting with their legal/financial professionals first. Bank of America Study of Affluent Families

57 Growing Trends: Percent of donors who learned about giving/ philanthropy options from a financial advisor: 1994: 4% 2008: 28% NCPG Task Force Study, The Future of Charitable Gift Planning.

58 Growing Trends: Sources of Charitable Advice Accountant: 67.5% Attorney: 40.8% Financial Planner: 38.8% Nonprofit Fundraiser: 24.1% University of Indiana Study

59 However, before you begin: Be Aware!

60 Who initiates the charitable gift conversation? CPA s & Wealth Advisors Only 5.7% Attorneys Only 6.3% Donors/Clients 94% Source: Bank of America/Merrill Lynch

61 How do donors/clients feel about this? Only 21% are satisfied with Advisors! Why? The Tax Lead: Donors motivated to give to reduce taxes. Advisors: 46%, Donors: only 10% Donors were frustrated they had to initiate the philanthropic conversation. (34% open to idea if brought up by Advisor. 43% if Advisor shares own plans) Advisors focused on the technical; did not discuss personal or social values. Source: Bank of America Study & The Philanthropic Initiative

62 The typical approach to planning: The Planning Horizon Why? How? 80% of time spent on How (tactical) 20% spent on Why (dreams/social values/concerns) RESULT: 75% of clients/donors don t take action!

63 Something to think about

64 The transfer of wealth is coming! Expected wealth transfer : Over $59 Trillion Amount directed to Nonprofits/Charities: Over $6.3 Trillion Boston College Center on Wealth and Philanthropy:

65 Who currently has the wealth: Share of Wealth Silent/Greatest Generation: 53% Baby Boomers: 38% (Youngest is now 50 years old)

66 Are You Ready?

67 Thank You!