Wealth management firms that offer philanthropic advice can expect to see a 25% increase in revenue during a ten-year relationship with a client, a study has found.

Research published by civil society organisation Charities Aid Foundation (CAF) has found engaging clients on ways they can donate and support charities “would bring significant economic benefits” to advisory firms as well as to the good causes they support.

For its study, modelling has been used by research firm Public First, which replicated 2013 advice on engaging clients around their giving to good causes, used projections for assets under management, and compared this to those who were not offering such advice.

CAF said: “This is the first time the benefit of philanthropy conversations to UK advice firms has been quantified.

“In a market where wealth management businesses face challenges over client attrition and net outflows, philanthropy can help firms retain clients and their investments.”

However, CAF has also found that many financial advisors are not meeting clients’ needs around philanthropic options, with less than two in five believing it is important to discuss such issues with clients despite three in five wealthy individuals wanting such advice.

The financial Conduct Authority is being urged by CAF to develop a strategy for training financial advisors on philanthropy and adding it to their continuing professional development.

This is among recommendations by the government’s Social Impact Investment Advisory Group, whose final report led to the setting up of the Office of the Impact Economy, to boost philanthropy.

Mark Greer, managing director for the Charities Aid Foundation, added: “Philanthropy in the UK has considerable untapped potential for wealth management firms, charities and wider society.

“An increasing number of wealthy individuals are interested in impact capital, and while leading wealth managers and advisers appreciate the value of raising philanthropy with clients, some are behind the curve.

“There has been some reluctance among advisers to talk to clients about giving away money out of a fear they will reduce funds under management - This modelling shows that the opposite is true, and a philanthropy offer increases the value of client portfolios.”

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