The interest in art and collectibles as part of a holistic wealth management strategy continues. Technology, changes in regulations, and social impact investing are key trends to shape the art and finance market in 2019 and beyond. Investment in art and cultural infrastructure is flourishing at up to $9bn over the past 3 years, and technology is expected to play an increasingly vital role in the art market, according to the latest Deloitte & ArtTactic’s “Art & Finance” report, unveiled last month in Monte Carlo in the presence of the Monegasque Minister of Finance and Economy, Jean Castellini, Monaco Economic Board Executive Director, Guillaume Rose, Monaco based collectors, art professionals, private banks and renowned speakers in the art sector.
The Deloitte Art & Finance Report examines the art and finance market through its Wealth Management Survey and via ongoing market research. For the 2019 edition, Deloitte and analysis firm, ArtTactic conducted research between April and June 2019, polling 54 private banks and 25 family offices involved in wealth management, as well as 105 major art collectors and 138 art professionals, including galleries, auction houses, art advisors, art lawyers, art insurers, and art logistics providers.
Rosemont International and Rosemont Art Advisory were the official sponsor of this year’s 12th Deloitte Art & Finance conference and were pleased to invite the conference for the 1st time to Monte Carlo, federating the Monegasque and international industry professionals in the art, finance and culture eco-system.
Here are the main findings from the Deloitte Art & Finance report 2019:
- The trend of including art and collectibles in wealth management portfolios and wealth reports is as strong as ever, 81% of collectors are expecting such holistic service offering from their wealth managers, an increase from 66 percent as seen in 2017.
- Ultra-High-Net-Worth Individuals’ wealth associated with art and collectibles was worth an estimated US$1.742 trillion in 2018 and is expected to grow further. This year’s survey results show particularly high agreement among wealth managers, art professionals, and art collectors that art is an important component of a wealth management service offering. Among the findings are the way in which technology will impact change in the art market. Already tech start-ups in the field have raised around $600m over the last 8 years, half of which was aimed at transaction-related businesses. The next generation is expected to focus on what the report calls “peripheral business segments”, be that contracts, legal, education, new artist discovery and so on.
- Tech is expected to profoundly impact aspects such as regulation--appropriately so, given that 54% of wealth managers surveyed thought the market needed more government regulation. Compare this to 46% opting for a “self-regulation” approach (a stark decrease from 2017 when this figure was at 60%).
- The findings reveal that lack of transparency is an ongoing concern for collectors, causing continued distrust in the market, in addition, a newer challenge derives from next-generation investors whose interests extend beyond financial returns to social impact.
- Indeed, across the board there were also increased calls for business practices in the field to be modernised--76% of wealth managers surveyed felt this way, as did around 80% for both art professionals and collectors (compared to 73%, 74% and 64%, respectively, in 2017).
- The entry into force of the fifth anti-money laundering directive in January 2020 will act as a driver of this much-needed change.Such regulation would also require due diligence on beneficial owners during every transaction.