The wealth management industry is undergoing a significant transformation. With global financial markets characterised by volatility, traditional investment platforms are being pushed to one side by wealth managers, High Net Worth Individuals (HNWIs) and Ultra High Net Worth Individuals (UHNWIs), who are increasingly seeking alternative assets to diversify their portfolio.
A compelling series of arguments have already been delivered around art as an asset class. Many have questioned if art can have a long-term capability to outperform other equities; presenting little financial risks to buyers, and from a broader investment portfolio perspective, assuring adequate liquidity with individuals able to turn their art collections into liquid assets through secured-lending. The Fine Art Group, Maecenas, Lot-Art.com, Wunder and PassionProtect® - Art&Motion® came together to debate on the topic 'Is Fine Art a Good Investment?'
Art and wealth management is not a new concept. For many decades, private banks and wealth managers have helped their clients with their art and collectible wealth. With the value of art increasing, and with an estimated US$1.6 trillion in art and collectible wealth held by UHNWIs alone in 2016, an estimated US$2.7 trillion by 2026, a more strategic and holistic approach to art and wealth management is required and was being explored by 1858 Ltd, Sotheby's, Citibank and Dr Alessia Zorloni, author of the book Art Wealth Management: Managing Private Art Collections. Adriano Picinati di Torcello, Director Management Consulting, Global Art & Finance Coordinator, Deloitte Luxembourg also gave insights from Deloitte Art & Finance report 2017.
Today's art market is proving more important and globalised than ever. However, the lack of transparency and issues of authenticity are undermining trust and credibility in the art market. The legal and regulatory framework within which art businesses are required to operate is becoming increasingly complex.
Several countries have imposed anti-money laundering requirements on art dealers as part of ongoing effort to protect the art market from being a victim of criminal organisations that abuse such situations to blend the process of their illegal activities with the surrounding abundance of wealth and euphoric market conditions. Julian Radcliff, Chairman at The Art Loss Register, the recognised international database of stolen and falsified art spoke on curbing illicit trade of stolen and illegally excavated or exported objects, fakes and forgeries, and the diversion of funds in the art trade.
Against this backdrop and the growing tide of state imposed regulation (notably the enhanced Swiss Anti Money Laundering reforms which came into force in 2016), a group of art market businesses and specialists came together in Geneva to form the Responsible Art Market Initiative (RAM).
Yan Walther, Managing Director at SGS Art Services and a member of the RAM initiative, raised awareness on the practical guidance and platform RAM provides for best practices to be shared so as to better help address and reduce risks for art businesses and collectors alike, thereby restoring trust in the art market and combating negative public perceptions.