Why Wealth Managers Should be Helping their Clients to Lend Works of Art to Museums
On Friday, 30 May, wealth managers, art dealers, scholars and journalists attended the 8th Annual LBS Art Investment Conference on Cavendish Square.
Organised by a group of this year’s LBS MBA students, it is a unique event where art is discussed in the context of finance.
“When bankers get together for dinner, they talk about art” - Oscar Wilde
While the finance types and economists on LBS’s panels discussed whether art should technically be considered an asset class, how to insure your wealth that is tied up in art, the growth of the worldwide art market and if it should be considered a ‘bubble’ or the ‘wild west,’ everyone attending was made aware that the one thing that all high net worth individuals have in common is art of some kind – be it a Buffett, a Hirst, a Rodin, classic cars, rare stamps or estate jewellery.
“With 300,000 art advisors worldwide according to the TEFAF report this year, how will wealth managers and their clients know whose opinions to trust?” asked Harco van der Oever, a Dutch banker turned auction house executive turned art advisor.
It is true that there is no accreditation for art advisors, and that the art world can seem untrustworthy to any newcomer who is used to the strict regulation of financial markets.
There was a feeling that the connection between private wealth management and art is a new one. But banks have always used the arts as a way to connect with their high net worth clients in a way that is more meaningful than dry and disengaged equities, commodities, stocks and bonds. This was confirmed by both Luke Dugdale of the Royal Bank of Canada’s Wealth Management department who has over 25 years’ experience in finance, and Richard Nicholson, an insurance broker with over 47 years experience in insurance and 28 years’ experience insuring fine art.
Though the worries for authenticity, insurance and honest opinions are all very valid, and the importance of art collection management is indeed a cornerstone of wealth management, wealth managers and private bankers can find a really simple solution to the risks involved in buying and keeping art.
The trustworthiest people in the art world are not art advisors, auction house specialists or gallerists. The experts – regulated, expected to be experts in their fields and non-partial – are curators at the tens of thousands of museums worldwide.
Any museum professional is regulated by a very easy to understand code of ethics written by the International Council of Museums. This code is considered the minimum a museum must abide to, from how to acquire or deaccession a work of art to the due diligence needed to trust the provenance of an object. Curators specialise in a specific area of expertise, and are impartial in their opinions. They have a lot more experience than junior specialists at auction houses or an art advisor that is new to the field. In summary - if a museum curator wants to speak to a wealth manager or their client about a work of art, there is a security that the work is of cultural interest.
Wealth managers and museums already have ties, but primarily about estate planning and bequeathment. A quick look at the wealth management seminars organised by the MFA in Boston describes the type of conversations that are already occurring between the two parties.
But much more regular contact with museums is now possible online, through Vastari. This way, works can securely be shared with museums worldwide via a secure online platform.
Many high net worth individuals choose to remain completely anonymous about what they own, but working with curators obtains the level of exposure needed to ensure that the work, and the artist, stays in the conversation. Furthermore, academic exposure at museums does not have the same effect that auction records do. They validate the provenance and the authenticity of the work while also adding cultural value to it.
Vastari allows high net worth individuals to upload their works to a platform that can only be accessed by curators at non-profit institutions who have been verified by the Vastari team. Wealth managers and collectors alike can get notified when these curators are interested in their works of art, and rest assured that they will not be forgotten for upcoming shows.
Beyond the benefits of sharing the work with the public and the value-add this brings, exhibiting works of art at museums can also offer tax benefits, especially in the UK with the Conditional Tax Exemption Scheme for Culturally Significant Heritage Assets.
“Art is the new gold – a new storage of wealth,” proclaimed curator Kenny Schachter at the close of the LBS Conference. This wealth held in art will raise risks, but ensuring you are in touch with the right people makes all the difference.
Those wishing to join the select group who are taking advantage of the Vastari museum-networking platform should visit vastari.com.