As the private art collections of ultra-high net worth individuals develop to rival those of major museums, new trends are emerging in art wealth management to combine the best practices of the museum sector with the objectives of clients and trustees holding private art collections.
Randall Willette, managing director of Fine Art Wealth Management, which recently hosted a Collas Crill Trust sponsored roundtable “Benchmarking Art Wealth Management and Collection Care”, says sophisticated collectors are adopting the same professional standards for their private collections.
Mr Willette said: “Today the private art collections of ultra-high net worth individuals can rival those of major museums, and with the help of skilled advice these collections can leave a lasting legacy.”
Benchmarking, he explained, is a tool used by established art institutions to identify areas of need and improve the risk management of collections as well as the operational and financial performance of museums and galleries.
“It is equally important that sophisticated collectors establish appropriate fiduciary structures in which to hold their private collections to meet their succession planning and asset protection needs over the long-term”.
A strong increase in fine art prices and its diversification qualities compared with traditional asset classes have driven current interest in art as an asset class, said Collas Crill Trust’s Heath Martorella.
“Art has inherent challenges for fiduciaries, including concerns over diversification risk, but jurisdictions like the Channel Islands have responded by modernising trust laws to allow non-charitable purposes to hold specific assets, as well as introducing newer innovations such as private trust companies and foundations which facilitate the holding of art and other alternative assets as single asset classes,” he said.
Featured speakers at the April event, an intimate gathering of wealth management and art market professionals in Knightsbridge, included Jennifer Scott, curator of paintings at the Royal Collection Trust; Dr Alessia Zorloni, museum consultant and adjunct professor at IULM University, Milan; and Heath Martorella, senior client relationship manager at Collas Crill Trust, Guernsey.
Ms Scott’s presentation included tips for private collectors from the experience of the Royal Collection Trust, which manages one of the largest and most important art collections in the world. She explained how the Trust uses a number of other leading museums and galleries as benchmark partners to measure its own performance.
Dr Zorloni examined the collection management policies and benchmarks used by major museums and highlighted how international best practices for museums and galleries are particularly relevant to the increasing number of private galleries and museums being established by high-net worth individuals and families, often for philanthropic purposes.
Mr Martorella said: “Collas Crill Trust was delighted to sponsor this seminar, which brought together key players from the museum and private client sectors.
“There are significant opportunities for clients and trustees to adopt best practices and benchmarking from museums. Private art collections can benefit from implementing clear objectives, investment policies and risk mitigation processes. Combined with appropriate fiduciary structuring and governance, clients’ long-term objectives for their art collections can be met.”