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May 03, 2007


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Sean Stannard-Stockton

Really great post Phil. It can be difficult for people to take the broad perspective that Collier does, especially if their incentives are misaligned. Harvard clearly "gets" why Collier should be helping donors, even when gifts go elsewhere. We began a discussion about misalignment of incentives at the advisor level and I confess I didn't keep up my side of the conversation.

All advisors deal with the fact that their clients spend money (lost assets under management), but few try to block "appropriate" levels of spending. Too many advisors don't take that attitude with charitable giving. However, what about "inappropriate" levels of giving? Some people might call "Inspired Giving", "inappropriate", but that's because they are trying to maximize financial outcomes, not maximize their clients' joy, "self actualization" or social impact. How do we align incentives so that advisors help clients even when it means lost assets and lost fees? Unfortunately I don't have an answer. At Ensemble Capital, because we have focused on the philanthropic family, we know that helping people give in the best way possible may sometimes limit short term fees, but it maximizes long term revenue because our happy clients make referrals. But few firms are going to focus on philanthropy enough to realize those benefits. I hope that as an industry we can discover ways to realign incentives. I would be the first to embrace a well designed structure.


Right, the incentives are mis-aligned. I think the process has to be donor led, or donor driven. That is the tack I expect to see Inspired Legacies encourage, and I believe other donor networks will follow. Donor is lead partner. Advisor is advisor and partner, but is not entitled to set goals. Not for the advisor to say, "You can't give your money away! I am counting on the basis points to cover my children's education!"

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