The Financial Conduct Authority (FCA) has been called on to tackle a “passive resistance” among many financial advisers to giving their clients philanthropy advice.
It should take steps to “accelerate the necessary education” and bridge a “knowledge gulf” in UK philanthropy, according to a report by Pro Bono Economics (PBE).
PBE’s report states philanthropy services offered by the UK’s financial sector are a “ragged patchwork” often limited to the super-wealthy and are failing to meet growing demand.
Nonetheless, it notes there is significant demand for advice on philanthropy, with 42% of millionaires saying they would like an adviser to help them make the most of their charitable giving, while 41% said it was important to discuss their charitable giving with their advisers.
Nicole Sykes, director of policy and communications at PBE, said the demand for informed philanthropy advice has grown significantly over the past decade, and will continue to grow as new generations of wealth put increasing emphasis on purpose.
“As it stands, the UK financial sector is failing to meet that growing demand,” she said.
“A gulf in philanthropy knowledge among financial advisers means the sector is missing a huge opportunity to provide services that will benefit clients, firms, the competitiveness of the sector globally and society at large.
Five steps for the FCA
The report describes progress on the issue over the past decade as moving at a “snail’s pace”.
It adds that there is “clear impetus” for regulation from the FCA to encourage the financial services sector in the UK to take the “necessary leap forward” in its provision of philanthropy services.
The five steps in the report include requiring the addition of philanthropy to the curricula of qualifications, and emphasising that meeting client demand for impact solutions, and philanthropic solutions in particular, is part of the Consumer Duty.
Sykes said: “It is clear the change that is required will simply not happen without action from the regulator.
“This report recommends five practical, proportionate steps for the FCA to take, which are neither revolutionary nor burdensome, but which could nevertheless make a meaningful difference to an issue that is currently holding the financial services sector back.”
‘Demand is growing among more purpose-driven younger generations’
Mark Greer, managing director of giving and impact at Charities Aid Foundation said he supports the call for the FCA to add philanthropy to its work on sustainable finance and include it in training for financial advisers.
“We know the demand is there from individuals to talk about giving with their advisers,” he said.
“Our research found that four in 10 millionaires say they would like an adviser to help them make the most of their charitable giving, and this demand is growing among more purpose-driven younger generations who will come into significant wealth.”
Theo Clay, policy manager at NPC said: “The evidence that offering this support would help firms is also really important – there's a real win-win route to creating more social impact for investment banks and their clients.
“More broadly, this highlights the need for government to pay more attention to this issue. We'll continue campaigning for a joined-up philanthropy strategy to increase giving and – equally importantly – increase the impact of that giving.”
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