Wealth Management for Collectors

Abstract

Most high-net-worth individuals hold a portion of wealth in residential real estate and some collecting category. Art is the predominate collecting category of high-net-worth individuals, and this paper investigates the general effects of incorporating art as well as the particular effects of incorporating a client’s art holdings when making wealth-management decisions. New indexes based on transparent like-object market transactions and replicable quantitative methodologies allow for comparisons of the returns from collections and other assets. Individual asset class risks and the correlation of returns among asset classes are important criteria that can be derived from these indexes. We use the Mei Moses® family of fine art indexes as proxies for art-market financial performance. We also include the effects of the S&P/Case-Shiller U.S. Residential Real Estate Index.

JEL Classification: G11, G12