UK financial sector failing to meet growing demand for philanthropy services
Melanie May | 22 November 2023 | News
Philanthropy services offered by the UK’s financial sector are a “ragged patchwork” often limited to the super-wealthy and failing to meet growing demand, according to new research from Pro Bono Economics.
There is also a ‘passive resistance’ among advisors to helping the wealthy “give their money away”, it says, despite evidence of a growing desire for philanthropy advice among wealthy clients.
The report, Ragged patchwork: The need to overcome the philanthropy knowledge gulf, included interviews with around 25 philanthropy experts, financial advisers and philanthropists. It calls on the Financial Conduct Authority (FCA) to take five key steps to bridge a “philanthropy knowledge gulf” in the industry.
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The report also notes that among the high street banks such as Barclays and HSBC, dedicated philanthropy services are restricted to their private banking arms, and that services often employ just one or two philanthropy specialists. Among the leaders in the field, according to the report, are international wealth management firms with UK bases, such as UBS and JP Morgan, and the most elite private banks, like C. Hoare & Co., which it found tends to offer some of the most intensive and impactful philanthropy services to clients.
Progress moving at “snail’s pace”
The report describes progress on the issue over the past decade as moving at a “snail’s pace”, and says 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.
Recommendations for FCA
It identifies five proportionate steps for the FCA to take to “accelerate the necessary education” of financial advisers, including requiring the addition of philanthropy to the curricula of relevant financial advice qualifications and adding philanthropy to the continuing professional development (CPD) requirements of retail advisers.
Making philanthropy services more widely available would benefit clients, firms, the competitiveness of the financial services sector and society at large, according to the report.
“Significant demand” for advice
The research notes there is significant demand for advice on philanthropy which needs to be met – with four in 10 (42%) millionaires saying they would like an adviser to help them make the most of their charitable giving, while a similar proportion (41%) say it is important to discuss their charitable giving with their advisers. Failing to meet these needs of clients is in contravention of Consumer Duty requirements, it says.
In 2019-20, charities in the UK received £21.8 billion in individual philanthropy. The report notes that, ultimately, increasing high-quality philanthropy services will benefit society by driving a greater volume of money to be spent more impactfully.
Nicole Sykes, Director of Policy and Communications at PBE, said:
“Over the past decade, the demand for informed philanthropy advice has grown significantly 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.
“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.
“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.”
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About Melanie May
Melanie May is a journalist and copywriter specialising in writing both for and about the charity and marketing services sectors since 2001. She can be reached via thepurplepim.com.