When collectors buy that first painting, rookie card, or bottle of fine wine, they’re rarely thinking about the long-term financial impact it might have on them, their families, and the generations to follow. However, through acquisitions and appreciation, these collections grow. Before long, what was a humble passion pursuit is now a treasure trove worth hundreds of thousands — or even millions — of dollars. 

Perhaps a collector always considered collecting to be an independent pursuit, an expression of individuality and curiosity. The increase in dollar values, however, often invades that whimsical escape with financial complexities. Managing those complexities can be burdensome, especially when a collector approaches them the same way they did their collecting: alone. 

But it doesn’t have to be that way.

Identifying and working with the right family office can transform complex situations into manageable ones, enabling collectors to focus on the things they love most about collecting.  By integrating the guidance of all their trusted advisors into every aspect of their financial, tax, and estate planning, the right family office team can help make the mountain of meticulous details more manageable. Consider the many benefits of utilizing family office services for those who own large and valuable collections.

Greater rigor around collection management.

For collectors driven by a passion for their chosen category, the financial might of their collections can often be a secondary — or entirely overlooked — consideration. They didn’t begin collecting for monetary gain, and they may very well remain unmotivated by it. However, over time, collections can appreciate considerably, growing to represent a much larger portion of a collector’s balance sheet than initially intended.

As that happens, ignoring the financial ramifications of a collection can become increasingly calamitous.

Unfortunately, wrapping one’s arms around a collection and ensuring its financial health is a demanding and intimidating process. That process is much more digestible with help. Experienced family office professionals can help high-net-worth collectors assess their collections, identify areas that require attention, and implement strategies and solutions. 

The list of areas potentially requiring attention is lengthy:

• Valuation
• Insurance
• Authentication
• Storage & Security
• Ownership Structure
• Estate Planning
• Sales & Acquisitions
• Philanthropic Activity
• Collection-Based Borrowing

Considering all of these areas independently — or even identifying them — is a tall order. But consultative assistance can significantly reduce the burden.

Multiple services, facilitated by a single point of contact.

Identifying and evaluating that long list of areas requiring attention is one thing. Implementing the necessary solutions is another.

Planning adequately around a collection may require enlisting several reputable service providers to assist with the various elements of collection management. For an individual collector operating independently, finding and enlisting those providers can be overwhelming and time-consuming. Collectors won’t often find all of them under one roof.

A family office can act as that one roof, that one collector-facing stop.

By working with a family office, high-net-worth individuals can ensure access to all these services through a single point of contact. Whether the family office offers in-house services or leverages existing relationships to facilitate services on the collector’s behalf, the process is vastly simplified. The number of hours saved in research, diligence, and administrative work can be dramatic for collectors who would rather spend their free time identifying the next great addition to their collections.

Reduced reliance on the collector’s knowledge.

Nobody understands collections better than the collectors themselves. Driven by passion, collectors carefully assemble their stores, with great attention to detail and a keen eye for assets that suit their objectives and tastes. Over time, though, their knowledge of their collections can become siloed. Perhaps their families don’t share the same interest, and their hobby has been just that: theirs. It’s a highly independent pursuit, and the health, preservation, and future of the collection become entirely dependent on the collector’s knowledge and presence.

This reality not only heaps significant pressure on the collector’s shoulders but also introduces material risk should the collector pass away or become incapacitated. Consider all the challenges uninformed heirs might face in the collector’s absence. 

By engaging with a family office, collectors can mitigate much of that pressure and many of those risks. Professionals can offer a second set of eyes, ensuring the collection is positioned for long-term stability while also gathering the requisite knowledge and information to ensure that future transitions of ownership — whether through death or otherwise — occur smoothly.

Holistic planning, accounting for the entire balance sheet.

Because collectors often treat their collections as siloed assets, objects of passion rather than financial consequence, they can become prone to overlooking how these assets might interact with the rest of their balance sheet. As collections grow in size, this oversight can become particularly dangerous.

Some collectible assets are prone to significant volatility in valuation. Ignoring these assets could result in a portfolio that incurs a level of risk incompatible with an investor’s risk tolerance. Or perhaps a collector has thought extensively about estate or succession planning for their more traditional assets, but largely kept their passion assets out of that conversation. That choice could lead to suboptimal planning outcomes.

By engaging with professionals who consider the full scope of a client’s balance sheet, collectors can ensure that their collections are accounted for in the context of their overall financial picture. This inclusion can result in portfolio positioning better suited to a client’s risk tolerance, objectives, and time horizon, and it can also ensure that planning conversations appropriately account for assets that may have grown to represent a material portion of net worth.