Transcript

Mike, every year you put a question to your clients asking to help pick a charity for your practice to support.

Yeah, it's one of our favorite things to do.

So these have ranged from the humane society to food banks, regionally specific ones like Covenant House in Toronto or the Guelph-Wellington Women in Crisis.

Yeah, and those are driven by our clients. So every year we have a bit of a fun raffle. And started off about 10 years ago where we had my children actually pick the names of our clients randomly, and they were young at the time. And then we'd go back to those clients and ask them which charities they'd like us to support.

So I've come to know over the years too that I know how important this topic is to you, and that's why we're digging deep on it today. I'm Stephanie Mattice with Michael Yhip. Welcome to the MarketCast presented by Michael Yhip Wealth Partners. Allison Marshall is with us too. She's part of RBC's family office services group.

Tony Moreno's team, remember him? That's an episode to tap into in case you missed it. Allison is a powerhouse strategist when it comes to helping people make sense of their family goals as it relates to philanthropy. It really struck me that it seems you have an incredibly uplifting, albeit challenging job. What do you love about it?

Getting to hear the stories from our clients of what's inspiring them to want to give back to their communities. They have such powerful stories, and each one of them is different of why they feel so fortunate in their own personal situations so that they have this wealth now that they want to now give back to causes that are important to them.

What do you think about that when you're coaching people through it?

They're not just looking locally, they're looking outside of their communities, outside of Canada. So it can be challenging and feel that they're being asked quite a bit to support different needs. And they don't want to be spread too thin. So that's where our conversation can begin where strategically, our philanthropic advisory specialists will meet with the clients and really drill down to determining where do they want to make an impact.

86,000 charities in Canada alone?

I can't remember. I think it's over a million in the US as well. There's so many worldwide great causes to support.

How do you help people cut through the noise of those requests or those competing charities to determine that the acts of giving are a fit for them personally?

It's looking for a cause that aligns with what you want to make an impact for and then working with that charity. It depends on how much money we're giving to of whether you can make a transformational gift. Some are making gifts where they're having naming rights for buildings and such and others are smaller gifts. And you can still make a significant impact there.

What are the most common questions you're getting from your clients around this?

Our clients have these transformational moments. I think that's when there's a pretty big reflection on, as we move into this next stage of our lives, charity is going to be more important to them, and we want to be efficient. We want to be able to take our dollars and make sure they have the biggest impact,

So there's a lot of tax considerations. I think there's structure considerations. Should we start our own foundation or are there other vehicles we can use? And then I think, as Allison mentioned, about naming rights, I think that people are thinking about legacy fundamentally. And when you enter into that space, that's where we can provide a lot of information, really behind the scenes information on what does a legacy gift look like?

Yes, part of what we can help our clients with is going through a more structured process to look at more broadly, what geographies do you want to cover. What sectors, are you interested in climate, education, whatever it is, health sciences. So once we can help have those conversations, it's really listening and helping to narrow down what do you want your legacy to be.

What is going to carry on through your family name after you're gone? And so that can be quite powerful for a family to think about, what do they want to be known for?

And what does it do for the family in real time?

When you have everyone coming together to have philanthropic strategy to give money away to others, it's an opportunity for families to work together and have to come together to agree on where they want to make that impact. When you have little kids in the family, if you have young kids like myself, then that's an opportunity to pass on family values.

What are important for the parents? What are important for the grandparents? What do we want the kids to learn out of this? When the kids are older, you might have some kids that are involved in the family business, you may have some who aren't, and that's OK.

But you want each person to have a purpose in the family, even if they are not part of that family business. They have a very important position in the family to help drive that family legacy. And so there's lots of different strategies where philanthropy can be used to help keep that family together.

This is a wonderful opportunity to regroup and have this beautiful philanthropic strategy.

That's right.

I think that some of the most special moments I've had with clients is during those presentations of those transformational gifts. I mean, there's always tears of happiness and tears of joy in a client relationship, but man, is it ever emotional when big gifts are given?

That's why I was saying in the beginning, I feel like what you're doing is so uplifting. You're getting emotional just talking about it.

No, I actually am because there's a book that I tend to give clients, it's called Die With Zero. And this book actually talks about the meaning of money. And most of our clients have more money than they'll ever need. And to find that joy of money while you're alive, you can see the impact is probably one of the best expressions of why you work and why you build wealth. And so that's why I'm getting emotional about it because it did lead to a great gift in one case.

This is another compliment to your team in terms of working with you means that you have this incredible thinker who looks at this specifically. Is that fair?

Allison's team and Allison have great conversations with many of the most important families in the country. And because they all give differently and because there's so many different situations on who they'd like to give to, what's the best way to provide that gift, not just from a big picture perspective. Do you give it to a hospital or do you give it to warchild as an example?

But when you start to make those decisions start to bring into some other great planning points, like what kind of structure should you be using to take those dollars further? And there's real value in that. I mean, there are structures that really bring down the cost of giving that most clients are not aware of, most people are not aware of. And if they knew which we do, I think they'd be very surprised and they would probably be even more charitable.

So that's where I think Allison's team, our planning specialists, our tax advisors, our team, we all come together and I think we're able to execute a legacy strategy, a philanthropic strategy, very well.

That's just it. I mean, if we can help someone give back to charity, but do it in such a way that maybe you can even give even more, we're here to help. Take a look at your whole picture, because in many cases, people are making these donations already year to year. But there might be a way that you could give even more.

And over time, depending on the structure that you give, if you give it in such a way that you're making a large gift. But maybe the timing of when you want that to be actually granted out to various charities might not be in that particular year.

Maybe you want to work with a charity and see how they're going to work with a smaller gift first, and then decide over time if we have deep conversations with the clients to get to know what are your goals and priorities and look over time because sometimes it might not be that it makes sense to make a gift until--

The cottage is built.

--the cottage is built. That's right. And you want to enjoy it. You want to enjoy it because that's important time with family too.

University is done or any number of obligations.

That's right. Or some might just feel that no matter what they're concerned about the what if scenario of what if I need that extra amount of money?

Yeah, that's a real concern. Even though there's this big pot of wealth, they want to make a transformational gift. They still need our help to plan. How will the investments grow?

What are the other tools we can use to provide gifts today, and perhaps upon their passing? Insurance would be one of them. Are there any considerations about using leverage in some of these strategies? It does get technical, but again, this is where the team has the capability to really help guide the clients in this area.

Yeah, it really helps where family office services has a subject matter experts where we can go in and do a plan. So there's peace of mind on, I'm going to be OK. I can see it mapped out. And this is how much fits into my financial picture today during my lifetime. And then maybe in estate planning, that's a great strategy to do as well.

Now there are tax advantages to giving as well, how does that play out for different donors?

That's one that's important because most people would take their donation, get the federally allowed donation refund and think I've done all the planning that I need, and they think that that's the best way to give. But to be really, really extreme, we've set up donations and structures over time that have actually resulted in a positive cost of giving, and that's almost unimaginable to people.

How is it that I can create a charitable donation and either it would cost me very, very few dollars or I would actually be paid to do it? And that particular strategy is a little bit complex, it requires the use of operating companies, it requires the use of certain securities, but that does exist. And if you have significant means and are actually in that position, we can perhaps help you with that.

And another one is, of course, the use of insurance policies, which could be meeting the objectives of both tax and donation, and of course, very simple strategies like donating appreciated securities as being a very, very tax efficient way to use some of the success in the portfolio.

Tax rules change all the time. We are following all of the latest updates in family office services, so that's why having someone meet to make sure that rules change. So last year alternative minimum tax came into play. You want to make sure that that's not going to be a surprise.

You want to make sure you can utilize the full donation on your tax return. Maybe it's better to make the donation from your corporation rather than you individually. So there's a lot of facets to consider, and that's why you want to meet with an expert who knows all of these rules, who can help you make the right decision.

That's it for today on MarketCast presented by Michael Yhip Wealth Partners, and with guest Allison Marshall and me, Stephanie Mattice. Thanks for listening.

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