Wealthy investors have many reasons for building collections of art, antiques, automobiles and more. Profit is rarely one of them.
In this issue of UBS Investor Watch, we found that a quarter of wealthy investors are collectors. They spend significant time and money building their collections, driven by a deep passion for their subject.
Though motivated by passion, most collectors consider their collections to be valuable, estimating them at 10% or more of their net worth. Despite this, many collectors fail to treat their collections as a meaningful investment. For example, 51% of collectors have never sought an appraisal, and almost half have no insurance on their collection.
Overwhelmingly, collectors prefer to pass on their valuables to heirs rather than sell them. Yet few have educated their heirs on how to manage, appraise or sell the collection. Moreover, heirs are rarely enthusiastic about inheriting collectibles, though duty and guilt lead many to hold onto them.
Overall, just 35% of investors who inherited a collection had an interest in it. Objects, it seems, are easier to transfer than passion.