COURTING THE NEXT GENERATION OF MILLIONAIRES
How do you determine value? What makes this a good investment?
These are questions many young heirs are asking as they gear up to take over their family’s wealth. In 2014, a study by Boston College’s Center on Wealth and Philanthropy, noted that $36 trillion is expected to transfer to heirs in the US from 2007 to 2061. This spike in inheritance is due to what Bloomberg calls “the largest generational transfer of wealth in history.” According to research done by consulting firm, the Spectrem Group, inheritance matters. 73% of the investors surveyed, who were under the age of 50 and had assets over $25 million, told the Group that inheritance factored into their success.
To avoid seeing assets leave when wealth is handed to the next generation, wealth managers are discovering new and interesting ways, such as art investment, to keep these heirs as clients.
Citi Private Bank, Credit Suisse Group AG, Deutsche Bank AG, and UBS Group AG, hold private sessions on buying and valuing art. Experts from the art world are invited to present and advise young heirs on criteria to determine the value of artwork such as quality, condition, rarity, and provenance. Topics also include entrepreneurship and how to protect their family’s reputation in today’s digital landscape.
By the year 2020, the US is predicted to welcome an additional 3.1 million millionaires. Today, there are approximately 8 million households with assets totaling more than $1 million, excluding real estate and luxury goods such as art. According to a recent study by Bloomberg, an average of 1,700 Americans cross the millionaire threshold each day.
Being well versed in the art market is critical as the asset class becomes a major strategy for wealth managers. According to Deloitte’s 2015 Art and Finance report, 73% of wealth managers surveyed said that their clients wanted to include art in their wealth reports, an increase from 58% in 2014. With global art sales totaling close to $64 billion in 2015 and post-election auction sales hitting record prices, art continues to prove that it is a great store of wealth and strategy for portfolio diversification.
Full article on Arthena Blog.
