I provide strategic planning services for owners of unique assets, such as art collectors, numismatists, family business owners, and legacy real estate owners. When describing my work to other advisors, such as asset managers, accountants, estate planners and family business consultants, I am usually asked the question: “What makes a collector so different?”
This is a difficult question to answer succinctly. The discussion tends to evolve into a sort of field guide for an advisor: describing what is a collector, which I prefer to describe as “an owner of unique assets,” and how their needs differ from other high net worth clients.
First, it is important to note that a single individual may own similar types of assets that they consider “investments” that they are willing to buy and sell if the price is right. They may also own assets that they consider to be “unique” and which they are unwilling to sell for any price; they are, however, willing to spend money on preserving and growing those assets. The key difference is a personal and emotional bond the client has with the unique asset, unrelated to its financial value. Typically the sentiment is based on the experience the client had in acquiring the asset.
No one is a pure “collector” or a pure “investor”; rather, everyone is a blend of the two. Over time, however, there is a definite transition for some clients when the emotional and personal value of owning unique assets becomes a significant part of their lives. They become increasingly invested in how they control and transfer ownership based on their principles; how they can access outside expertise and capital without loss of control; and how they and their family can maintain financial security without risking the ownership of their collection.
This transition is gradual and usually marked by a number of sometimes contradictory traits. These traits include:
- An increasing intellectual, visual, and emotional stimulation from having and knowing about the items in the collection
- Seeking out other passionate (and sometimes eccentric) dealers, artists, curators, and collectors who share their interests
- An expansive view of how the collection reflects intellectual issues, even though the collection may be quite narrow and focused
- An increasing fascination with the gossip of the collecting world and with the social, personal, and financial lives of dealers, artists, and collectors
- An increasing desire to share information about a unique asset when asked (often in the form of “war stories”)
- An increasing desire to conceal their passion from others, especially from those who might “take advantage” of the collector’s passion for their own financial gain
- An increasing willingness to preserve and grow the collection, family owned business, legacy real estate, or other unique assets based on the social and cultural value of the asset as they now own it, not just on the financial return they receive from it.
So, if you are a collector, what do you need to handle these assets? You need 1) inventory and provenance systems, 2) management of significant business relationships on buying, selling, and growing the value of the assets, 3) access to expertise in the storage and moving of assets, 4) organization of the copyright, reproduction, and display rights of tangible property, and 5) control over the voting rights over closely held companies.
At The Erskine Company we create Unique Asset Management Plans to organize and integrate the services of curators and other cultural personal representatives, as well as provide access to expertise and capital for management and growth. We provide the strategic plan for the collector client. If the financial, emotional, and social value of the unique assets requires it, we also create a “Unique Asset Family Office”.
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