Certified financial planner Kenneth Waltzer, managing director and co-founder of KCS Wealth Advisory in LA, said his view is that if clients are going to invest in collectibles, they should do so out of passion.
“You shouldn’t do it purely from a money-making standpoint,” he said. “If you love art, you should collect art that you enjoy looking at.”
Justin Anthony, co-founder of Denver-based Artwork Archive, said he likes art as an investment “because of the other value it brings, in addition to the speculative or potential financial gain.”
Experts agree that, whatever a client’s net worth, collectibles should usually comprise no more than 5% of a portfolio.
“For people with average-sized portfolios, I’d say 5% is a good rule of thumb,” Waltzer said.
Another expert said “I don’t think you’re going to find too many financial planners who’ll go out on a limb and say ‘hey, let’s allocate a substantial sleeve of your portfolio to collectibles'”
“In a $10,000 portfolio, to allocate 5% to collectibles. Okay, so you’ve got that one coin your grandfather gave you,” he said. “That’s versus someone with a $2 million portfolio allocating 5%.
“Boom — you’ve got $100,000 worth of collectibles, and that can span a couple of collections or be just one fantastic piece of art.”
Experts also point to several drawbacks to collectibles as an investment.
First, for the experts, there is always the need to put the client first.
“We’re responsible for making sure that if we do make such a recommendation, it makes sense,” one expert said. “The last thing a professional wants is to find themselves dealing with is a lawsuit or arbitration around why they made a recommendation to put a substantial amount of money in a baseball card set.”
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From CNBC – 23/06/2019
