Integrating Art and Collectibles into Modern Wealth Management Portfolios - 2024
Wealth management is witnessing a paradigm shift, with diversification and personalization becoming pivotal. The Deloitte Art and Finance Report 2023 illuminates the significance of art and collectibles as strategic assets in wealth management.
Table of Contents
- Building Emotional Connections
- Diversification and Performance
- Navigating the Macro-Economic Landscape
- Engaging with a Wider Client Base
- Investment Trends and Opportunities
- Incorporating Art-Related Services
- Global Art Market Expertise
- Trends in Investment-Oriented Collecting
- Conclusion
Building Emotional Connections
The report reveals a discrepancy in client trust: only 41% of clients greatly trust their wealth managers, and a third have already shifted over 20% of their funds to alternative providers. Over the next two years, 44% plan to do the same. This highlights the need for wealth managers to forge deeper emotional connections, potentially through art and collectibles.
Diversification and Performance
Clients are diversifying their portfolios with art and collectibles, accounting for an average of 11% of their total wealth. The allocation varies, with 29% of wealth managers reporting 3-5% of overall wealth in art, and 13% reporting over 20%.
Navigating the Macro-Economic Landscape
In a challenging global economy, wealth managers must adopt a holistic approach. The impending transfer of approximately US$80 trillion from baby boomers to younger generations, including significant art and collectibles, underscores the need for this approach.
Engaging with a Wider Client Base
The mass-affluent market, controlling over US$47 trillion by 2025, demonstrates a growing interest in alternative investments, including art and collectibles. This trend presents a substantial opportunity for wealth managers.
Investment Trends and Opportunities
Art investment funds and clubs are on the rise, catering to clients seeking uncorrelated returns. 88% of wealth managers in 2023, up from 85% in 2021, recognize the importance of art and collectibles in wealth management. Among collectors, this sentiment rose from 76% to 87% in the same period.
Incorporating Art-Related Services
The integration of art into wealth management is accelerating. Now, 75% of wealth managers intend to offer art-related services, and 74% plan to provide art-specific wealth management services.
Global Art Market Expertise
Wealth managers are increasingly required to have expertise in major art market hubs like New York, Miami, and London, offering specialized tax and estate planning advice to navigate these complex markets effectively.
Trends in Investment-Oriented Collecting
The rise in fractional ownership platforms and art investment funds highlights a shift towards viewing art as a significant investment asset, further diversifying investment portfolios and reflecting new collecting trends.
Conclusion
Art and collectibles are not just ancillary interests but central components in a modern wealth management portfolio. The Deloitte Art and Finance Report 2023 makes a compelling case for their integration, citing their role in diversification, client relationship enhancement, and tapping into new market trends. For visionary wealth managers, art and collectibles represent a strategic necessity in portfolio management.
Sources
Adriano Picinati di Torcello
