A more subtle way to show your wealth

THERE was a time, not so very long ago, that bling was in. Fast cars, sleek super yachts, and private planes were fundamental to living the jet-set lifestyle which was the City dream for much of the Noughties.

But then the markets collapsed and sunning yourself on your yacht in the Caribbean became little more than a pipe dream. Many wealthy individuals suffered badly from the collapse in equities in the autumn of 2008 while those lucky few who had kept their wealth no longer flaunted what they had.

However, the 2010 Merrill Lynch/CapGemini World Wealth Report showed that the population of high net worth individuals (HNWIs) grew 17.1 per cent in 2009, nearly recovering the declines of 2008. And demand for so-called passion investments started to return in 2009, although outright global demand remained weaker than before the crisis. But while the wealth might be back, the bling has gone. More and more high net worth individuals are choosing to invest in art and jewellery – a more subtle form of showing your wealth than the traditional boys’ toys.

Ileana van der Linde, principal in CapGemini’s wealth management practice, says: “After the crisis, what is interesting is how more high net worth individuals are still cautious about the financial markets and we are starting to see a trend of investor-collectors emerge. They were typically not interested in such passion investments but are now looking for a safe haven for their money.”

She says that these investor-collectors are still cautious and consequently they are gravitating towards art, fine wine, antiques and other memorabilia.

“Many investors are looking for a pleasure that is not going to lose its value, unlike automobiles and yachts,” says Michael Plummer, co-founder of Artvest Partners, an independent art-finance consulting firm that advises a range of clients across the world on how to invest in art and helps them to negotiate the art market. He adds: “People are more prudent about their passion investments post-crash. We help clients determine if they are spending their money in the right place and advise about whether that sector of the art market is a good place to invest their money.”

There is also growing interest among the Asian wealthy in fine French wines and Scottish whiskies says CapGemini’s van der Linde. These have been proving popular thanks to their tangibility and their lower entry prices. For example, fine wine merchant Bordeaux Index says that while demand is driven principally by consumption, there is also a parallel increase in collecting and investing. This is expanding the market and making fine wine a more tradable and robust asset class, it says.

With wealthy individuals increasingly choosing to invest in non-bankable assets, it is important to have a global overview of their total wealth. Many wealth managers will take a holistic view to your assets and can point you to specialists and insurance providers.

However, Swiss private bank Lombard Odier has developed a global custody product that fully integrates all your assets from equities to collectibles in one online platform. Gery Odermatt, head of the bank’s global custody business development, says: “Customers would like to have all the elements included in one report that gives them an overview on everything.”

Passion items are not bought purely as an investment, but the value and tangibility of art and other memorabilia is certainly increasingly appealing.