As Art Market Gets More Professional, So Will Private Banks In Risk Management - Advisor

Tom Burroughes

9 October 2014

The world’s art market will become more professional and increase rapidly, while private banks are likely to get better at managing risks associated with this area, a firm specialising in the sector said in response to a recent major report by , a firm operating in this space, reckons that investors have intensified their scrutiny of art funds in general conducting even more rigorous due diligence and demanding greater transparency.

“In short, investors have rewritten the rules of engagement as they continue to absorb and process the lessons of the past few years. The art and collectibles fund industry must act to lay the ground work for the future by building investor confidence,” the firm said in a note.

Among other predictions the firm makes are that solutions that are developed by family offices in response to the needs of sophisticated collecting families will become the R&D for future art wealth management services; investment in art and collectibles will continue to grow and evolve primarily appealing to sophisticated investors as part of a portfolio diversification strategy, and it predicts heightened regulation requiring increased compliance and reporting for art funds will create even higher barriers to entry.

The organisation also expects family offices will move away from art funds in favour of direct investment in art as family offices become more like private equity and venture capital firms. It also expects to see a growth of privately managed art accounts offered by family offices which are personalised and tailored to their specific needs.