Think of the term 'philanthropist' and often the first image that comes to mind is that of a wealthy Boomer.
A quick Google search for 'philanthropist' will throw up photos of Bill Gates, Warren Buffett, maybe Oprah Winfrey.
But Gen Z is fast becoming a generation that wants to give as much as they can, whenever they can.
Younger people are increasingly choosing to give money to social and environmental causes important to them, with the actual process of growing wealth taking a back seat.
While philanthropy may still be regarded as a personal endeavour, it should be an area financial advisers and wealth managers are exploring, according to experts.
The National Philanthropic Trust estimates the global philanthropy market to be £182bn and said in 2020 people in the UK gave £11.3bn to charity in the UK up from £10.6bn in 2019.
Earlier this year, the Charities Aid Foundation published a study which showed a fifth of financial advisers did not know how to offer advice on philanthropy.
Couple this with the generational divide in wealth advice and there's a clear need for practical support at the younger end of the wealth market.
Aligning with values
The Global Returns Project, which aims to make climate philanthropy easier for the clients of financial planners, claims younger people are looking for advisers who can help them use their money in a way that aligns with their wider values.
Head of partnerships at the organisation, Rachel Derrick, says while 63 per cent of advisers are concerned about a loss of business due to the great wealth transfer, just 16 per cent have a differentiated marketing strategy for younger investors.
She says: “Many younger clients don’t want an adviser who focuses exclusively on wealth maximisation.
“Instead, they expect their adviser to help them figure out how much money they need to live comfortably, and how to deploy the rest in line with their values.”
It also looks at the generational difference in interest in sustainability and Derrick believes climate causes are a way to connect with younger clients.
She adds: “As well as being more likely to want advice on philanthropy than older generations, younger generations are more interested in sustainability."
According to the GRP, 79 per cent of Gen Z investors those born between 1997 and 2012 are considering a company’s ESG credentials before investing, compared to only 29 per cent of the Baby Boomers.
Confidence
At the start of 2024, the Charities Aid Foundation published the results of a survey of more than 200 advisers, of which less than 5 per cent said they would be “very confident” giving advice on philanthropy.
Mark Greer, the foundation’s managing director for giving and impact, said as well as benefiting charities which are struggling under the challenges of the cost-of-living crisis and in the wake of the Covid-19 pandemic, there could also be advantages for advisers and their clients.
