A brand-new study from the wealth management firm US Trust indicates a deep generational divide in between exactly how older and young collectors think of their investments.
To name a few findings, the "Insights on Wealth and Worth" research recommends that abundant millennials could be in for a shock concerning the future worth of their collections.
YOUNG COLLECTORS CHECKLIST
- Young art collectors are taking a risk viewing art as an asset class.
- Younger collectors have less access to capital to spend on art than their older counterparts.
- Young collectors take risks in art medium choices.
- Social media is a useful tool to keep in touch with updates from artists and galleries.
- It is wise that millennial art collectors should study art history in order to have an edge over their peers.
US Trust is the private wealth management arm of Bank of America, which sponsors major museum exhibitions, lends money to collectors against their art assets, and handles the finances of various American museums.
US Trust has been doing similar studies of very wealthy Americans for several years, but this is the first time they've asked their respondents about art.
The report is based on a survey of 684 "high net worth and ultra high net worth adults" nationwide, with assets totaling north of $3 million.
Some of the study's findings might be comforting to those who believe that art's principal worth is aesthetic, intellectual, or cultural.
Three-quarters of collectors surveyed say their primary reason for collecting is art's aesthetic value.
Other findings may be more alarming, if not entirely surprising. Among millennials, for instance, fully two-thirds believe that the real value of fine art is not its intrinsic value.
One in four respondents believe art is an asset "expected to increase in value over time," regardless of age group, and just over sixty percent don't think that investing in art is "risky."
If these younger collectors are buying in expectation of a reliable return on investment, though, they may be in for a surprise, in the bank's view."
"That approach is, in our opinion, not smart," said Evan Beard, art executive at US Trust.
Beard joined the company in March after working in art and finance for Deloitte.
There's a lot of loose language out there on art as an 'asset class,'" he added. Young collectors, Beard pointed out, have had their attitudes formed during a skyrocketing market.
They've never seen big downturns in the sector, like their elders."
Young collectors have grown up in an ecosystem of art as part of the global experience economy, with news-making art fairs and auctions, major economic players associated with art, and big capital inflows," he pointed out.
Beard points out that those charts that favorably compare performance of artworks at auction against the stock market leave out transaction costs and the price of insurance - never mind the countless artworks that never make it to auction in the first place.
Beard pointed to art history for a lesson in the vagaries of taste and value, referring to the Academic painters who ruled the Paris art scene in the 19th century."
Meissonier, Gérôme, Cabanel, Bouguereau-- they were the big artists of their day," he said. Referring to 1807, Friedland, a large Meissonnier canvas at New York's Metropolitan Museum of Art, he pointed out that in 1876.
It went to a department store magnate for a stratospheric $60,000."
Now," he said, "I imagine some curators would be happy to put it in storage. These days, you often see Meissoniers come up at auction for $10,000."
When it comes to millennial collectors' view of the future value of their investments, Beard added, dryly, "There may be some rose-colored glasses."
But,just how do young collectors navigate the artworld?
The rest of this article is dedicated to a window at their way of life and routines.
1. YOUNG COLLECTORS HAVE LESS ACCESS TO CAPITAL
This conclusion comes at no real surprise. There are circumstances where young collectors continue a family lineage of art collecting (with household money), but let's get realistic here.
Regardless of the buzz regarding freshly produced twenty-something billionaires, not all young business owners, bankers, and tech masters are obtaining capital that quickly.
2. YOUNG COLLECTORS TAKE MORE RISKS
Downs described a small distinction between older and younger art collectors is their "sensibility."
She said, "Younger collectors gravitate towards unusual materials and are closer to the contemporary sensibility that the young artist is in tune with. The older collectors are looking for more traditional pieces that are a little less risky."
3. YOUNG COLLECTORS HAVE NO PROBLEM BUYING ONLINE
Independent collector and curator, Roya Sachs, claims, "I love collecting at art fairs; there’s an energy and pace that is both thrilling and exciting, I guess in that sense I am much more of a traditional face-to-face collector".
She proceeds, "I will occasionally buy online, in galleries, and through auction if I am looking for something more specific."
With on the online art market multiplying, it's simple to think that a more youthful generation that matured with the Web would be totally open to transitioning from offline to online.
However Tara Downs, supervisor of Tomorrow Gallery informed artnet Information, "I would certainly claim that 50% of my sales take place by a person entering into the gallery."
While she does exchange photos over e-mail, she states, "a great deal of collection agencies want to watch the operate in individual."
4. YOUNG COLLECTORS HUSTLE AND NETWORK
Kenneth Schlenker of online art platform ArtList told over the phone, "Older collectors read Artforum, they'll have advisors or they'll work closely with one or two galleries.
The young collector is networking with more people and is being proactive to get access to things by themselves, earlier, before its being shown at a gallery.
5. YOUNG COLLECTORS USE SOCIAL MEDIA TO KEEP IN TOUCH
It's difficult to fully gauge how social media affects sales transactions, but it's easy to realize that social media is being used to engage and start conversations.
Schlencker says, "Millennials want a direct connection. More often than not, they'll add the artist and gallerist on Facebook and Instagram."
Michael Xufu Huang, a collector and co-founder of Beijing museum M Woods, uses Instagram to "promote his museum and keep in touch with gallerists and artists" but never to buy from the app directly.
6. YOUNG COLLECTORS INVESTIGATES
"First thing they do is follow the people they look up to, collectors or celebrities in the art world. You end up discovering new artists, then you look for the hashtag, and then if you're really interested you'll look for prices and articles," he Schlencker says.
This includes connecting with them via social media as well as in-person. "Following the right people, checking out what they have, most of the time its on Instagram," he explains.
7. YOUNG COLLECTORS AQUIRE PERSONAL WORKS
On a similar note, Traisman says a new favorite Instagram handle he follows is @bryants_cuba because "as the US relationship with Cuba evolves I believe these artists are poised to make a major impact."
Zhang Enli's work, Space Painting (2014), was recently acquired by K11 for K11 Kollection at Unlimited Art Basel in Basel.
Hong Kong-based collector and founder of K11 Art Foundation, Adrian Cheng said, "I have been following Zhang Enli's works for many years.
8. YOUNG COLLECTORS OFTEN REINVEST
There is a lot of talk of a new breed of "art flippers" - those who buy and sell art to turn a profit.
It's a way of short-term collecting that most veterans of the art world vehemently dislike, for good reason.
New York and LA-based art collector and restaurateur Noah Traisman says he does buy and sell art but only to reinvest the money he makes from each sale into more art.
Trainman informed that, "There is a misconception by many collectors that brokering deals or 'flipping' is a way to make money, but most people I know simply do it to grow their personal collection. To this day 100% of my profits have gone straight back into my collection."
9. YOUNG COLLECTORS LACK ART HISTORY
An observation that makes sense again, because as pointed out above, the Millennial generation is a younger generation. It takes time to know the historical importance and references in art.
Dealer Matt Moravec of Off Vendome said, "I don't think there is much of a difference between old and young collectors. Both can be trendy, good, bad, market driven or not. The biggest difference is maybe that older collectors often have a better understanding of art history and the place that newer work fits into a historical conversation."
7. YOUNG COLLECTORS PROGRAMS
Depending on the level you are in, young collectors councils include museum procurements, unique occasions, VIP access to art fairs, as well as artist studio visits.
Participants could vary from bankers, sponsors, art world elite to all type of innovative personalities.
These councils provide access to the "exclusive" art world, while acquiring cultural art education along the road - 2 great reasons Millennials like it.
Young collectors do not simply intend to acquire art, they also need to know more about the art market itself.
Organizations like the Guggenheim Museum, the Museum of Modern Art, as well as the Whitney Museum all have programs that obtain Millennial collectors early in their careers.