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 perspctive, assuring adequate liquidity with individuals able to turn their art collections into liquid assets through secured-lending.
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.
Recognizing the growing move towards art as an alternative asset, the inaugural edition of UNFOLD Art XChange integrated topics on Art, Finance, Wealth & Risk Management onto Day 1 of our Art Talks II: Evolving Cultures, Developing Collections.
Research among wealth managers and private banks attests to art’s developing role. The Deloitte Luxembourg and ArtTactic Art & Finance Report 2017 reveals that the recent survey shows an increase from 78% in 2016 to 88% in 2017 of wealth managers saying that they think art and collectibles should be included as part of the wealth management offering, the highest registered reading since the launch of the survey in 2011. In response to this growing trend, many private banks and financial institutions have also developed art advisory, art lending and art investment services as part of their offering.
Although there are fashionable aspects about buying art, for an increasing number of HNWIs, art and collectibe are playing a more significant role in their lives and is accounting for a larger share of their overall wealth, a trend that is forecasted to continue in the next 10 years. In addition to these financial attributes, there are also strong emotional and social aspects associated with buying and owning art-motivations that wealth managers are realizing could be harness and cultivated more effectively, ultimately resulting in a stronger and more sustainable client relationship.
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. Many smaller art businesses and individual collectors are facing a growing number of operational and reputational risks when dealing with artworks.
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 surronding abundance of wealth and euphoric market conditions.
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).
RAM aims to raise awareness amongst art businesses of risks faced by the art industry in Switzerland and abroad and to provide practical guidance and a platform for the sharing of best practices to help address and reduce risks for art businesses and collectors alike, therby increasing public trust in the market and combatting negative public perceptions.
+Adriano Picinati di Torcello, Director Management Consulting, Global Art & Finance Coordinator, Deloitte Luxembourg kicked off Day 1 of our Art Talks II with highlights from Deloitte Art & Finance Report 2017
+1858 Ltd, Sotheby's, Citibank and Dr Alessia Zorloni, author of the book Art Wealth Management: Managing Private Art Collections came together to discuss on developing a holistic relationship for UHNWIs, with focus on monetizing, partnering and transferring one's collection
+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? How Blockchain Technology is Democratizing the Fine Art Market?'
+Kaneka Subberwal, Fair and Program Director ArtBab and Founder Artselect in Bahrain gave an exclusive pre-lunch interview where she shared her views on Art as an Investment and how Bahraini artists are growing and challenging the boundaries in the global art market.
+The Art Loss Register, Messner Reeves LLP, Faurschou Foundation, SGS Art Services, Willis Towers Watson and Deloitte Forensics shared their views on restoring trust, curbing illicit trade and protecting the integrity of your fine art collection.
+Swaady Martin, Founder & CEO, YSWARA in Johannesburg gave an interesting insight on the creative cross-polinations with artists for her tea brand, YSWARA and shared on the Nirox Sculpture Park artists' residencies during her interview.
+Philippe Meaille, Founder & President of Chateau Montsoreau-Museum of Contemporary Art in France closes Day 1 of our Art Talks II with an exclusive interview where he shared on the Philippe Meaille Collection which is known today as the world's largest private collection of Art & Language works.
Click on the link below to view the photos from Day 1 of our Art Talks II, courtesy of Filmatography: