Sunday, May 12, 2013

Art’s role in wealth management fast evolving

The Art & Finance Confidence Indicator courtesy Deloitte and ArtTactic, seen as a barometer for international wealth managers’ grasping of trends like art as an investment class, art-secured lending as well as the broader economic environment in the year ahead – confirmed a positive and proactive outlook: the indicator zoomed by 32 percent up to 42.3 percent. The report estimated that the art investment fund market value rose to $1.62 billion in 2012, up from just $960 million a year ago. What is the fallout of the rising value of art?

The rapid churn on the art & finance scene is triggering the demand for new wealth management services to protect, enhance or monetize this value. As a direct consequence of changing client needs, the role of art in wealth management is fast evolving and moving from client entertainment to art wealth management services; only 27 percent of the wealth managers seeing client entertainment as a main motivation.

Private banking institutions are more likely to focus on art and philanthropy in the next few years, underlining the fact that it’s a growing area of activity for wealth managers. With significant sums at stake in the intergenerational transfer of wealth – both financial & non-financial assets - taking place, wealth managers will need to give advice regarding art legacies, increasingly as well as effective ways to preserve their cultural and emotional value apart from financial one.

Not only wealth managers but also other stakeholders such as collectors and governments are reacting to the evolving industry. The rising tendency for collectors to use their art collection as collateral for loans is evident: 41 percent of collectors state that they would use their collection for this purpose. When asked their motivation for using art as collateral, 36 percent of collectors would use it to invest in other business activities, 39 percent to buy more works of art and 18 percent to refinance other loans.


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