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Overseas wealth – Eyeing new markets

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By Todd Cohen

Building on the rapid growth of its philanthropic services in the United States, Merrill Lynch is casting its net across the Atlantic.

In 1995, when it began offering philanthropic services as a separate financial-planning tool for high-net-worth clients, Merrill Lynch managed $350 million in philanthropic assets for 350 clients, says King McGlaughon, first vice president of Merrill Lynch & Co. and director of Merrill’s Center for Philanthropy and Nonprofit Management.

At the end of 2000, the company managed $4.7 billion for 4,600 clients, he said.

That represents nearly one-fourth of $17 billion managed by Merrill Lynch Trust Co., which has built its assets from $10 billion since the end of 1999.

Philanthropic assets that Merrill manages should grow another $1 billion to $1.2 billion this year, and double to $10 billion by the end of 2005, McGlaughon says.

Now, based on the regulatory climate in individual countries, Merrill is studying strategies for targeting individual clients in Europe with its philanthropic services.

Merrill could begin offering its package of philanthropic services – such as planned gifts, charitable trusts and donor-advised funds — in the United Kingdom in 2002, followed by Germany and Italy, McGlaughon says.

In the United Kingdom, for example, lawmakers in 2000 created the first direct individual tax incentives for charitable giving, he says, a policy the United States has had for 90 years.

“Part of what we’re doing as a firm is looking at that unique environment in the U.K. and trying to develop a similar service to U.K. clients that would support their philanthropy in the context of their regulatory environment,” he says.

Germany looks promising for a number of reasons, including tax incentives for individual charity, the development of community foundations and an on overall history of individual giving, he says.

And Italy holds potential because its dependence on the Roman Catholic Church to support social initiatives has left room for a big increase in giving by individuals, he says.

“At the end of 1997, Merrill Lynch Trust Co. became the largest individual provider of services of philanthropy to clients in the U.S.,” McGlaughon says.

Merrill’s commitment, he says, is to “continue to build strategic services globally for clients.”

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