NEW YORK — Most clients’ collections are a labor of love and not a quest for investment returns, according to financial advisers with collector clients.
NEW YORK — Most clients’ collections are a labor of love and not a quest for investment returns, according to financial advisers with collector clients.
The “high-net-worth” market, on the other hand, has loftier tastes. The rich gravitate to such luxury collectibles as jewelry, wines, aircraft and antiques, according to the “2007 World Wealth Report” released this month by Merrill Lynch & Co. Inc. of New York and Paris-based Capgemini Group.
“I have a client with an extensive collection of Mickey Mouse stuff,” said Ellen Dorle, a financial planner with Dorle Financial in Columbus, Ohio. The client also collects toys from the 1940s and 1950s, and pink-flamingo statues.
Ms. Dorle considers her client “eclectic” — not eccentric.
Passions parlayed
In addition to luxury collecting, wealthy clients are often enamored with “investments of passion,” such as racehorses, sports teams, and sailboats, the report noted.
“As high-net-worth individuals have become citizens of the world, they have parlayed a deep knowledge of many cultures into a diverse set of interests and hobbies,” said Bertrand Lavayssiere, director of Capgemini’s global financial services group.
Hearing an old jalopy roar again is the passion of a collector in Texas, who parlayed his fascination with old cars into an impressive fleet of 10 vintage automobiles that he restored to their former glory, said Patricia Barrett, a financial planner at Lifetime Planning LLC in Houston.
“Investments of passion have become yet another objective that high-net-worth individuals incorporate when assessing their overall goals and developing wealth management strategies,” Mr. Lavayssiere said.
Other folks just naturally gravitate toward what tickles their fancy.
Steinway or Mason & Hamlin pianos make excellent collectibles despite their bulk, noted Joseph Alotta, a financial planner with Open Door Investment Advisors Inc. in Westmont, Ill. “They appreciate about 4.5% a year, and you can also play them,” he said.
“One of my clients collects Civil War artifacts, including cannons and cannonballs,” said Diane Pearson, a financial adviser with Legend Financial Advisors Inc. in Pittsburgh.
Pens and watches are among the items collected by clients of Todd Rustman, a financial planner with GR Capital Asset Management in Newport Beach, Calif.
Another collector beholds ironic beauty in the art of Donald Roller Wilson, who specializes in painting chimpanzees in formal human attire. “The client considers his house to be his art gallery,” said Marc Schindler, a co-founder of Pivot Point Advisors LLC in Bellaire, Texas.
Mr. Schindler is himself an avid art collector, focusing on the works of such Texas artists as Dixie Friend Gay, who paints surrealistic nature scenes and animal mosaics.
Like his client, Mr. Schindler collects art because he enjoys it, though he sometimes sells or donates pieces.
He has 10% to 15% of his personal portfolio in art, but doesn’t recommend that clients do the same, unless they express an interest in collecting.
The wealthy “see paintings, drawings, and sculpture as viable vehicles for diversifying their portfolios, given the low correlation between art prices and the market cyclicality of stocks, bonds and real estate,” Mr. Lavayssiere said.
Some collections are ruled by correlations, others by emotions.
“The key to successful collecting is knowledge — much more so than investing in stocks or bonds,” said Daniel Wishnatsky, a financial planner with Special Kids Financial in Phoenix. “There is also an emotional element to a degree not present with ordinary investments,” he added.
Mr. Wishnatsky is proud of his coin and currency collection, which once included the famous “Banana Note” that “received extensive worldwide media coverage,” he said.
As the number of high-net-worth individuals interested in investments of passion primarily for financial gain increases, so does the possibility that these items become overvalued, the Merrill Lynch/Capgemini report noted. Financial services firms will have to delicately balance the financial and collectible interests of these investors, the report concluded.
But many collectors enjoy the thrill of the hunt — investment returns be damned.
Ms. Dorle’s client particularly cherishes a Peter Max “Liberty Head” he picked up at auction, she noted. “He is always on the lookout for unique stuff, and some has become valuable along the way,” she said.
