Answering Client Questions (Fall 2010)

I have reached a point in time where I need to take some money out of my art collection. Am I better off selling or borrowing?

 

The answer to this question depends on the individual’s circumstances. Artvest Partners reviews the client’s liquidity profile and interest rate bracket for art borrowing, as well as current market conditions for the items under consideration for sale. The firm also estimates the capital gains tax exposure (minimum 28% federal for art vs. 15% for financial assets). Only after this information is fully analyzed and weighed, can a sound determination be made.

 

The private bank where I work as a financial advisor has instructed me to ignore my client’s art holdings in the context of his financial planning. In the last five years his art collection has come to represent a significant portion of his net worth, and I am afraid that by continuing to ignore this part of his portfolio, I am not meeting my fiduciary responsibility.

 

While the art and financial markets are markedly different in almost every respect, both must be considered when assessing the overall risk of a client’s portfolio. Artvest Partners works with financial advisors, family offices and other fiduciaries to analyze and integrate a client’s art holdings into his asset allocation methodology. This includes risk exposure and liquidity requirements for the short, medium and long-term.

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