Welcomed as a distinguished guest at the Inaugural London event, Adriano Pincinati di Torcello, Director of Art and Finance at Deloitte, shared his insight and expertise in “What, How and For Whom?” is art and finance.
What is Art & Finance?
With a dynamically growing art market which behaves differently, Adriano started the day by setting the necessary context. Acknowledging the recent marketplace revolution; the democratisation of the art market, and the need for an increase in transparency and regulation, the term ‘Art & Finance’ was defined as focusing on 3 main drivers:
- The financial sector which includes investment opportunities, management systems, institutions and more catering for the art and collectibles industry
- The business sector which includes the usual suspects – auction houses, art fairs, art specialists and art tech companies
- Culture, the main driver for the peripheral economic sectors. It includes museums, cultural institutions and governments
With over 10 years’ experience, the data suggests that all 3 sectors have financial synergies between make them interdependent on each other.
During the economic crisis of the 90’s, the art market took about 15 years to recover. When the financial crisis hit again in 2008, the market took a mere 18 months to bounce back. Globalisation has undoubtedly made the market stronger.
Basing our findings of micro trends in the market on facts, look at culture; look at Abu Dhabi, its recent marketing activities, with the recent Louvre branch and the exponential auction purchases (Salvador Mundi sale for $450M), has definitely placed it on the global map. Cultural tourism has always had an impact on the economy, but now they are also developing technology.
Culture is Suffering
In a need to develop new financial resources, look to your own assets. Move from conversations to responsibilities; attract visitors and have a sensitivity.
Culture is now expanding across the world in new ways, positioned almost as a form of competition between cities and regions. Traditional commercial centres need to constructively think about this and reposition if they want to remain attractive. Let’s focus on Beyoncé for a minute and think of the Louvre. Her initiative positioned the museum as a forward thinking player, thinking differently to connect with a new audience and attract crowds.
Again, a Picasso was recently bought by 25 thousand people. This initiative took place in Geneva where 4,000 shares of a Picasso were up for grabs. As an alternative and successful way of supporting culture, each person spent US$51 for a fractional share and the work remains in the museum, providing liquidity and audience commitment.
Combining forces from the private and public sectors strengthens the support. Public museums compete amongst themselves to preserve culture but with the rise of 317 private museums since 2000 there is still cultural and aesthetic competition.
Technology is offering better analytics, helping the market understand its audience. Online sales are on the rise, disrupting the way of doing business.
More and more consumer brands are engaging with culture. Why? Because it is a way of transcending space and time, increasing reputation and trust. “The Contemporary Art scene has become what cinema was in the 50’s and 60’s, fashion in the 80’s and 90’s… Simply, it is mega-cool” noted a Strategist and Creative Director for luxury and consumer brands in the Deloitte presentation.
Art is working with top brands like UBS, Deutsche Bank, Louis Vuitton, Davidoff, AXA and Vodka to create neutral sources of revenue. Collaborating with such companies means there is no commercial conflict of interest because they simply want to offer their clients the best level of responsibility.
Institutions can build on this entrepreneurial momentum to monetise the experience. Creating knowledge that can shared and monetised with people in need of culture.
We have never had so many wealthy people on our planet. In 2016 there were high net worth individuals (HNWI) worth over $1M, and 32M UHNWI (over $30M) owning approximately $1.6B worth of assets. Despite collecting out of love for an artwork, collectors are conscious of the work’s financial value. If the market grows as predicted, by 2026 there may be $2.7B dedicated to collectibles.
With a monetary boom in China and Asia at large, there is no surprise that the focus is on Asian UHNWI, keen on contributing to the art and collectibles industry. Set more-so on the investment potential of art than in the West, priorities lie in self-regulating the market, implementing an anti-money laundering regime so that the new wave of rich know that what they’re buying is genuine and for the right price.
Currently facing one of the biggest transfers of wealth in generations, the market needs to dedicate its expertise to service family governance issues and advise on philanthropic estate planning.
The Four Pillars of Service
In the context of services for the art world, the primary goal is “protect the wealth of your clients.” The second goal is “increase their wealth.”