Stonehage Fleming opens Canadian gateway office
Stonehage Fleming, one of the world’s leading independently owned family offices, announces the opening of its new Canadian representative office, Stonehage Fleming (Canada) Inc. The office, located in Toronto, will be led by Mike Moodie who has been appointed Partner, having served as a Consultant to the Group and Board Member of Stonehage Fleming’s US operating company.
The representative office, opened in April 2017, is located in the heart of Toronto’s financial district at First Canadian Place and will serve as a gateway for high net worth Canadian residents with international needs to access Stonehage Fleming’s award-winning global network of offices and capabilities.
Mike Moodie’s role as Partner is effective immediately, reporting to Mark McMullen, CEO of Family Office at Stonehage Fleming. Mike will work closely with Stonehage Fleming’s Zurich office, which is authorised to handle the investment affairs of select Canadian resident clients, as well as, Peter Rosenberg, Partner and Head of our office in the US, and Stonehage Fleming’s London and Jersey offices in the British Isles.
Commenting on the announcement, Mark McMullen, CEO, Family Office at Stonehage Fleming said: “We are pleased to announce Mike’s appointment to Partner and the opening of our new representative office in Toronto. This demonstrates our commitment to providing holistic cross-border wealth management solutions to international families with interests in North America, as well as on the ground relationship management support to our existing clients based in Canada.
“Mike’s broad industry experience and contacts gained during a 30 year career with RBC, where as a senior executive he was responsible for growing the international wealth management businesses during subsequent postings in Canada, The Caribbean, USA and UK, make him a valuable asset for our growth ambitions as the leading international family office firm globally.”
Mike Moodie added: “I am excited to have been given the opportunity to lead the Canadian representative office as we seek to broaden our reach to Canadian residents looking for access to tailored wealth management solutions for their cross-border needs and objectives.
“In today’s complex world, it is increasingly likely that high net worth families need cross-border support to help simplify and coordinate their affairs, due to family members, assets, or business investments being spread across multiple jurisdictions. I strongly believe that Stonehage Fleming’s award-winning capabilities, cherished heritage as an international family office and independent ownership, will not only be welcomed but also align well with the long-term interests of Canadian resident clients who have cross-border profiles.”
In the two years since the merger that created Stonehage Fleming, the Group has won over 60 new mandates from clients and now looks after well over 250 substantial families globally. Assets under administration and management stand at over GBP35bn (USD43bn) (to December 2016) and the Group employs over 520 staff in eight jurisdictions. The firm is the largest Family Office in the EMEA region, ideally placed to understand and respond to the complex and rapidly evolving economic and political environment.
Stonehage Fleming open office in Toronto
Stonehage Fleming has opened a Canadian representative office, Stonehage Fleming (Canada), in Toronto.
It will be led by Mike Moodie who has been appointed partner, having served as a consultant to the group and board member of Stonehage Fleming’s US operating company.
The representative office, opened in April 2017, is located in the heart of Toronto’s financial district at First Canadian Place and will serve as a gateway for high net worth Canadian residents with international needs.
Moodie’s role as partner is effective immediately, reporting to Mark McMullen, CEO of Family Office at Stonehage Fleming. He will work closely with Stonehage Fleming’s Zurich office, which is authorised to handle the investment affairs of select Canadian resident clients, as well as Peter Rosenberg, partner and head of the office in the US, and Stonehage Fleming’s London and Jersey offices in the British Isles.
McMullen says: “We are pleased to announce Mike’s appointment to Partner and the opening of our new representative office in Toronto. This demonstrates our commitment to providing holistic cross-border wealth management solutions to international families with interests in North America, as well as on the ground relationship management support to our existing clients based in Canada.
“Mike’s broad industry experience and contacts gained during a 30 year career with RBC, where as a senior executive he was responsible for growing the international wealth management businesses during subsequent postings in Canada, The Caribbean, US and UK, make him a valuable asset for our growth ambitions as the leading international family office firm globally.”
Moodie adds: “I am excited to have been given the opportunity to lead the Canadian representative office as we seek to broaden our reach to Canadian residents looking for access to tailored wealth management solutions for their cross-border needs and objectives.
In today’s complex world, it is increasingly likely that high net worth families need cross-border support to help simplify and coordinate their affairs, due to family members, assets, or business investments being spread across multiple jurisdictions. I strongly believe that Stonehage Fleming’s award-winning capabilities, cherished heritage as an international family office and independent ownership, will not only be welcomed but also align well with the long-term interests of Canadian resident clients who have cross-border profiles.”
CICC Family Wealth Management Forum, Shanghai
How to protect and manage family legacies for generations? How to break the curse of ‘clogs to clogs in three generations’? How to become the long lasting family with sustained vitality?
Stonehage Fleming joined China International Capital Corporation, VCP Advisors and Shanghai Advanced Institute of Finance at the 2017 CICC Family Wealth Management Forum in Shanghai.
The team and a host of academic experts and industry practitioners explored the challenges facing high net worth families and identified what solutions are available within the current turbulent financial market.
Lord Robin Renwick, Non-Executive Director, delivered a keynote speech on Geopolitical changes in UK and Europe and Adam Fleming, Deputy Chairman, presented the history of the Fleming family and Stonehage Fleming.
Mark McMullen, CEO Family Office, and Matthew Fleming, Partner, joined the panel discussion on ‘Service and demand for family office’. Gerrit Smit, Head of Direct Equity Management discussed ‘Overseas Investment and Asset Allocation’.
Stonehage Fleming opens Canadian gateway office
Stonehage Fleming, one of the world’s leading independently owned family offices, announces the opening of its new Canadian representative office, Stonehage Fleming (Canada) Inc. The office, located in Toronto, will be led by Mike Moodie who has been appointed Partner, having served as a Consultant to the Group and Board Member of Stonehage Fleming’s US operating company.
The representative office, opened in April 2017, is located in the heart of Toronto’s financial district at First Canadian Place and will serve as a gateway for high net worth Canadian residents with international needs to access Stonehage Fleming’s award-winning global network of offices and capabilities.
Mike Moodie’s role as Partner is effective immediately, reporting to Mark McMullen, CEO of Family Office at Stonehage Fleming. Mike will work closely with Stonehage Fleming’s Zurich office, which is authorised to handle the investment affairs of select Canadian resident clients, as well as, Peter Rosenberg, Partner and Head of our office in the US, and Stonehage Fleming’s London and Jersey offices in the British Isles.
Commenting on the announcement, Mark McMullen, CEO, Family Office at Stonehage Fleming said: “We are pleased to announce Mike’s appointment to Partner and the opening of our new representative office in Toronto. This demonstrates our commitment to providing holistic cross-border wealth management solutions to international families with interests in North America, as well as on the ground relationship management support to our existing clients based in Canada.
“Mike’s broad industry experience and contacts gained during a 30 year career with RBC, where as a senior executive he was responsible for growing the international wealth management businesses during subsequent postings in Canada, The Caribbean, USA and UK, make him a valuable asset for our growth ambitions as the leading international family office firm globally.”
Mike Moodie added: “I am excited to have been given the opportunity to lead the Canadian representative office as we seek to broaden our reach to Canadian residents looking for access to tailored wealth management solutions for their cross-border needs and objectives.
“In today’s complex world, it is increasingly likely that high net worth families need cross-border support to help simplify and coordinate their affairs, due to family members, assets, or business investments being spread across multiple jurisdictions. I strongly believe that Stonehage Fleming’s award-winning capabilities, cherished heritage as an international family office and independent ownership, will not only be welcomed but also align well with the long-term interests of Canadian resident clients who have cross-border profiles.”
In the two years since the merger that created Stonehage Fleming, the Group has won over 60 new mandates from clients and now looks after well over 250 substantial families globally. Assets under administration and management stand at over GBP35bn (USD43bn) (to December 2016) and the Group employs over 520 staff in eight jurisdictions. The firm is the largest Family Office in the EMEA region, ideally placed to understand and respond to the complex and rapidly evolving economic and political environment.
Stonehage Fleming open office in Toronto
Stonehage Fleming has opened a Canadian representative office, Stonehage Fleming (Canada), in Toronto.
It will be led by Mike Moodie who has been appointed partner, having served as a consultant to the group and board member of Stonehage Fleming’s US operating company.
The representative office, opened in April 2017, is located in the heart of Toronto’s financial district at First Canadian Place and will serve as a gateway for high net worth Canadian residents with international needs.
Moodie’s role as partner is effective immediately, reporting to Mark McMullen, CEO of Family Office at Stonehage Fleming. He will work closely with Stonehage Fleming’s Zurich office, which is authorised to handle the investment affairs of select Canadian resident clients, as well as Peter Rosenberg, partner and head of the office in the US, and Stonehage Fleming’s London and Jersey offices in the British Isles.
McMullen says: “We are pleased to announce Mike’s appointment to Partner and the opening of our new representative office in Toronto. This demonstrates our commitment to providing holistic cross-border wealth management solutions to international families with interests in North America, as well as on the ground relationship management support to our existing clients based in Canada.
“Mike’s broad industry experience and contacts gained during a 30 year career with RBC, where as a senior executive he was responsible for growing the international wealth management businesses during subsequent postings in Canada, The Caribbean, US and UK, make him a valuable asset for our growth ambitions as the leading international family office firm globally.”
Moodie adds: “I am excited to have been given the opportunity to lead the Canadian representative office as we seek to broaden our reach to Canadian residents looking for access to tailored wealth management solutions for their cross-border needs and objectives.
In today’s complex world, it is increasingly likely that high net worth families need cross-border support to help simplify and coordinate their affairs, due to family members, assets, or business investments being spread across multiple jurisdictions. I strongly believe that Stonehage Fleming’s award-winning capabilities, cherished heritage as an international family office and independent ownership, will not only be welcomed but also align well with the long-term interests of Canadian resident clients who have cross-border profiles.”
CICC Family Wealth Management Forum, Shanghai
How to protect and manage family legacies for generations? How to break the curse of ‘clogs to clogs in three generations’? How to become the long lasting family with sustained vitality?
Stonehage Fleming joined China International Capital Corporation, VCP Advisors and Shanghai Advanced Institute of Finance at the 2017 CICC Family Wealth Management Forum in Shanghai.
The team and a host of academic experts and industry practitioners explored the challenges facing high net worth families and identified what solutions are available within the current turbulent financial market.
Lord Robin Renwick, Non-Executive Director, delivered a keynote speech on Geopolitical changes in UK and Europe and Adam Fleming, Deputy Chairman, presented the history of the Fleming family and Stonehage Fleming.
Mark McMullen, CEO Family Office, and Matthew Fleming, Partner, joined the panel discussion on ‘Service and demand for family office’. Gerrit Smit, Head of Direct Equity Management discussed ‘Overseas Investment and Asset Allocation’.
Stonehage Fleming Corporate Finance - Transaction Announcement
Stonehage Fleming Corporate Finance is delighted to report the successful completion of the sale of The Watch Gallery to Bucherer.
Stonehage Fleming Advisory Limited, led by Richard Hill and Nick Smith, acted as financial advisor to the shareholders of The Watch Gallery on the transaction.
The Watch Gallery, based in London, is the UK’s leading independent luxury watch retailer. The Watch Gallery owns the largest luxury watch concession in Europe at Selfridges Oxford Street, runs the UK’s leading luxury watch website (www.thewatchgallery.com) and is a strategic partner for Rolex with 4 stores in London including the largest in Europe at One Hyde Park, Knightsbridge.
Bucherer, the family owned business founded in 1888 and now led by Jörg G Bucherer, is the leading luxury watch and jewellery retailer in Europe, with over 1,600 employees. The Bucherer brand is present in 29 exclusive locations, with 16 points of sale in Switzerland, 10 stores in Germany, 1 flagship boutique in Vienna, 1 boutique in Paris (the world’s largest watch and jewellery store) and, since 2016, one store in Copenhagen, Denmark.
For further information please contact:
Richard Hill
+44 (0)20 7036 5724
Richard.hill@stonehagefleming.com
Nick Smith
+44 (0)20 7036 5609
Nicholas.smith@stonehagefleming.com
Pub Club: Susie Hillier and Richard Bertin, Stonehage Fleming Wealth Planning
Boulestin is a stylish French restaurant in historic St James’s, named after famous culinary innovator Marcel Boulestin, who was described in The New Yorker in 1932 as a ‘Doctor of the Philosophy of the table, Culinary Ambassador to the English, intelligent gentleman of France, man of the world, essayist of vigor and charm…’
We will have to take their word for that, writes Steve Plowman. What I can be sure of, is that I am joined there by an intelligent duo of vigour and charm, Susie Hillier and Richard Bertin of Stonehage Fleming Wealth Planning.
Bertin begins by suggesting that Hillier start our lunch by talking a little about her background, and after a little verbal tennis, Hillier obliges. ‘I initially started out in an insurance group, which was incredibly useful as I learned all of the things that I did not want to do. ‘It became clear that from a regulatory point of view, it was becoming very hard for an accountancy business to offer the same level of service as an investment planning business.
Having previously worked at Deloitte, I needed a brand that my client base could trust. Luckily for me, Richard had done the hard work in setting the business up.’ Hillier continues: ‘We then spent the next three years building the Fleming brand. From a Stonehage Fleming, multi-family office point of view, we joined that party in the summer.’
Read more via Citywire Wealth Manager
STEP 60-second interview with Mark McMullen
What is your role within your firm?
I am CEO of our family office division, and also serve as a key advisor to a number of high net worth international families.
How did it feel to win a STEP Private Client Award?
It is a real honour to be awarded the Multi-Family Office of the Year Award by STEP for the second consecutive year. We strive to set new standards of excellence for the wealth management industry, putting the family at the heart of everything we do, and are proud of this continued recognition as we work toward our goal of becoming one of the world’s leading family offices.
Why is winning a STEP PCA important to your firm?
The STEP PCA is a clear mark of quality, and winning it is a further endorsement of our reputation, our commitment to the international private wealth sector and of the high standards our team consistently delivers. The award is recognised by peers and clients and is a huge motivator for our staff.
What are the main challenges facing your organisation/practitioners at the moment?
I see two main issues – one facing our business and one facing our clients. The strength of our defences around client data is top of our minds for us as an organisation. Storing valuable information that is often regulated, potentially sensitive and private, makes it essential we remain diligent in protecting our clients’ data. For our clients, a sensitive and well-constructed approach to governance and succession planning should be a priority. Our recent thought piece, Four Pillars of Capital for the Twenty-First Century, highlighted quite stark differences between the generations’ views on succession planning.
How will you deal with these challenges?
We are constantly investing in technology and ways to further strengthen our security across the group, offering clients the peace of mind that their data is protected. Firstly it is all about employing the right people, who really understand security and follow best practice, and educating them on changing trends and technology. Outside the technology team we also implement rigorous staff training across the group through our risk and compliance departments. Secondly, we are continually evaluating our security, running daily automated testing on internet points and regular independent penetrating testing through world specialists. Intergenerational transfer is a crucial part of what we do, and we believe passionately that helping families identify and articulate the purpose of their wealth is as important as its management. We have extensive experience in this area, which the judges were kind enough to highlight, as well as promoting education and engagement with the next generation, through running two courses annually in the UK.
What do you like best about your job?
I have the opportunity to work with dynamic and stimulating people – both clients and colleagues. .. and what do you feel is most worthwhile? As trusted advisors, we are in the business of helping families preserve and grow their wealth. Building relationships to enable us to help them in this way, is demanding but very rewarding.
What would you say to a young person thinking of a career in this industry?
Experience will only be acquired over time, so technical competence (validated where possible through appropriate qualifications) is a vital starting point. And take technology very seriously.
Where do you see future growth, both in terms of sectors and jurisdictions?
We are the leading family office in the Europe, Middle East and Africa region, looking after a core group of some 250 families. We have an abundance of opportunity to further increase our client base within the region, including in the UK. In addition, we have always believed that you cannot serve families properly without the experience of dealing with their US based interests and family members, and have had a presence in the US for a number of years – we see significant growth potential here too.
Which social media channels do you use and why?
Social media is an increasingly important, particularly when it comes to engaging with the next generation. We are just starting to use Twitter (@SF_FamilyOffice) and Linked In to raise brand awareness for the Stonehage Fleming Group and strengthen our professional networks. We also recognise the contribution our employees could make in shaping industry conversation, and will start to explore this via social media in the future.
Stonehage Fleming Corporate Finance - Transaction Announcement
Stonehage Fleming Corporate Finance is delighted to report the successful completion of the sale of The Watch Gallery to Bucherer.
Stonehage Fleming Advisory Limited, led by Richard Hill and Nick Smith, acted as financial advisor to the shareholders of The Watch Gallery on the transaction.
The Watch Gallery, based in London, is the UK’s leading independent luxury watch retailer. The Watch Gallery owns the largest luxury watch concession in Europe at Selfridges Oxford Street, runs the UK’s leading luxury watch website (www.thewatchgallery.com) and is a strategic partner for Rolex with 4 stores in London including the largest in Europe at One Hyde Park, Knightsbridge.
Bucherer, the family owned business founded in 1888 and now led by Jörg G Bucherer, is the leading luxury watch and jewellery retailer in Europe, with over 1,600 employees. The Bucherer brand is present in 29 exclusive locations, with 16 points of sale in Switzerland, 10 stores in Germany, 1 flagship boutique in Vienna, 1 boutique in Paris (the world’s largest watch and jewellery store) and, since 2016, one store in Copenhagen, Denmark.
For further information please contact:
Richard Hill
+44 (0)20 7036 5724
Richard.hill@stonehagefleming.com
Nick Smith
+44 (0)20 7036 5609
Nicholas.smith@stonehagefleming.com
Pub Club: Susie Hillier and Richard Bertin, Stonehage Fleming Wealth Planning
Boulestin is a stylish French restaurant in historic St James’s, named after famous culinary innovator Marcel Boulestin, who was described in The New Yorker in 1932 as a ‘Doctor of the Philosophy of the table, Culinary Ambassador to the English, intelligent gentleman of France, man of the world, essayist of vigor and charm…’
We will have to take their word for that, writes Steve Plowman. What I can be sure of, is that I am joined there by an intelligent duo of vigour and charm, Susie Hillier and Richard Bertin of Stonehage Fleming Wealth Planning.
Bertin begins by suggesting that Hillier start our lunch by talking a little about her background, and after a little verbal tennis, Hillier obliges. ‘I initially started out in an insurance group, which was incredibly useful as I learned all of the things that I did not want to do. ‘It became clear that from a regulatory point of view, it was becoming very hard for an accountancy business to offer the same level of service as an investment planning business.
Having previously worked at Deloitte, I needed a brand that my client base could trust. Luckily for me, Richard had done the hard work in setting the business up.’ Hillier continues: ‘We then spent the next three years building the Fleming brand. From a Stonehage Fleming, multi-family office point of view, we joined that party in the summer.’
Read more via Citywire Wealth Manager
STEP 60-second interview with Mark McMullen
What is your role within your firm?
I am CEO of our family office division, and also serve as a key advisor to a number of high net worth international families.
How did it feel to win a STEP Private Client Award?
It is a real honour to be awarded the Multi-Family Office of the Year Award by STEP for the second consecutive year. We strive to set new standards of excellence for the wealth management industry, putting the family at the heart of everything we do, and are proud of this continued recognition as we work toward our goal of becoming one of the world’s leading family offices.
Why is winning a STEP PCA important to your firm?
The STEP PCA is a clear mark of quality, and winning it is a further endorsement of our reputation, our commitment to the international private wealth sector and of the high standards our team consistently delivers. The award is recognised by peers and clients and is a huge motivator for our staff.
What are the main challenges facing your organisation/practitioners at the moment?
I see two main issues – one facing our business and one facing our clients. The strength of our defences around client data is top of our minds for us as an organisation. Storing valuable information that is often regulated, potentially sensitive and private, makes it essential we remain diligent in protecting our clients’ data. For our clients, a sensitive and well-constructed approach to governance and succession planning should be a priority. Our recent thought piece, Four Pillars of Capital for the Twenty-First Century, highlighted quite stark differences between the generations’ views on succession planning.
How will you deal with these challenges?
We are constantly investing in technology and ways to further strengthen our security across the group, offering clients the peace of mind that their data is protected. Firstly it is all about employing the right people, who really understand security and follow best practice, and educating them on changing trends and technology. Outside the technology team we also implement rigorous staff training across the group through our risk and compliance departments. Secondly, we are continually evaluating our security, running daily automated testing on internet points and regular independent penetrating testing through world specialists. Intergenerational transfer is a crucial part of what we do, and we believe passionately that helping families identify and articulate the purpose of their wealth is as important as its management. We have extensive experience in this area, which the judges were kind enough to highlight, as well as promoting education and engagement with the next generation, through running two courses annually in the UK.
What do you like best about your job?
I have the opportunity to work with dynamic and stimulating people – both clients and colleagues. .. and what do you feel is most worthwhile? As trusted advisors, we are in the business of helping families preserve and grow their wealth. Building relationships to enable us to help them in this way, is demanding but very rewarding.
What would you say to a young person thinking of a career in this industry?
Experience will only be acquired over time, so technical competence (validated where possible through appropriate qualifications) is a vital starting point. And take technology very seriously.
Where do you see future growth, both in terms of sectors and jurisdictions?
We are the leading family office in the Europe, Middle East and Africa region, looking after a core group of some 250 families. We have an abundance of opportunity to further increase our client base within the region, including in the UK. In addition, we have always believed that you cannot serve families properly without the experience of dealing with their US based interests and family members, and have had a presence in the US for a number of years – we see significant growth potential here too.
Which social media channels do you use and why?
Social media is an increasingly important, particularly when it comes to engaging with the next generation. We are just starting to use Twitter (@SF_FamilyOffice) and Linked In to raise brand awareness for the Stonehage Fleming Group and strengthen our professional networks. We also recognise the contribution our employees could make in shaping industry conversation, and will start to explore this via social media in the future.
From hobby to enduring legacy
The first step to building a serious collection may not be deliberate. Often the initial purchase is on impulse. Having dipped your toe in the water, it is almost inevitable that you take a greater interest in the intoxicating world of art, but very few give enough consideration to the practicalities of owning an art collection. These range from initial due diligence to the ownership structures, succession planning, lending to museums, maintaining a catalogue, transport, storage, insurance, conservation and valuations, all of which require specialist knowledge and skills.
Read full CRS Art Law newsletter >>
Ownership of vehicles
Will the art be in the name of the individual or held through a trust, company or foundation? This decision begs numerous questions, starting with the purpose and objectives of the collection, which are quite likely to change over time. If, as is possible, a fiduciary structure is used, it is vital that the trustee has a good understanding of the practicalities of art management. They have a responsibility to see that the collection is expertly managed.
Purpose of trusts
The settlor may wish to keep the collection for personal use in their own lifetime, but must address what the future holds for the collection after they die. If the family are to be involved in the future, they should be involved now, so that they have a good grasp of the philosophies and intentions. Depending on the significance and content of the collection, they may wish the art to be available to a wider public, for educational purposes, or create their own museum. Clarification of the purpose of a collection helps avoid disputes amongst the next generation.
Due diligence or provenance
How do you make sure you are buying exactly what you think you are buying? Through tracing the work back to the artist in an unbroken chain, with proper documentation for each stage. The quality of the evidence will not only ensure you avoid the classic mistake of acquiring paintings looted in World War II, it will significantly affect the value if and when you try to re-sell. Obviously such due diligence requires an expert eye, independent from the auction houses.
Storage
Storage conditions are vital to the preservation of artwork. Whether it is stored in a private home, storage facility or museum, are suitable and reliable temperature and humidity controls in place? These factors could alter the condition of the work and ultimate value.
Taxation and paperwork
Correct advice and paperwork is especially relevant when moving artwork across borders; oversights could result in very costly penalties. Import and export licences, as well as cultural licences must be completed according to the shipment.
There are significant tax consequences depending on whether it is owned in a personal name, by a trust, foundation or company. Furthermore, not only must you think of who owns it, but of who enjoys it. The art may be owned by a trust but on the walls of a beneficiary, which could trigger tax issues. This may be managed by having the correct agreements in place.
Insurance
Appropriate insurance for art and jewellery is key. Insurers must be kept up to date on movement of the works, especially if they are on loan or in transit. Artworks should be labelled with the correct ownership details and the insurance policies must be in accordance with these.
Conclusion
Owning and managing an art collection is a complex business requiring frequent advice from a variety of different experts. Unlike investment management, the art world is almost entirely unregulated. This is a sobering thought when one considers the immense nature of the assets in question, potential conflicts of interest and the consequences of ‘getting the tax wrong’. Independent strategic advice is not easy to find.
Sell everything? Managers reveal coping strategies for turbulent markets
Gerrit Smit, partner & head of equity investment, Stonehage Fleming
Look for companies with competitive edge We believe the best investment strategy at any time is to buy only outstanding businesses with a particular competitive edge against its competition, and making sure we do not pay anything more than a fair valuation for that business.
If we succeed in getting this combination right, we believe we will reap handsome returns over time. We invest for the sustainability of dividend growth to benefit from the power of compounding interest by holding an exceptional business until it becomes overvalued.
Clearly one of the most critical issues of investing is to not overpay for the asset. Nobody knows how low prices may fall, but we can value any business. As long as we do not pay anything more than a fair valuation, chances are that we will succeed with our investment.
The current market turmoil again offers such opportunities to buy excellent businesses below fair valuations. We currently have the opportunity to be very selective about the quality of the business we buy to hold for the long term, and switch out of any weaker franchises.
From hobby to enduring legacy
The first step to building a serious collection may not be deliberate. Often the initial purchase is on impulse. Having dipped your toe in the water, it is almost inevitable that you take a greater interest in the intoxicating world of art, but very few give enough consideration to the practicalities of owning an art collection. These range from initial due diligence to the ownership structures, succession planning, lending to museums, maintaining a catalogue, transport, storage, insurance, conservation and valuations, all of which require specialist knowledge and skills.
Read full CRS Art Law newsletter >>
Ownership of vehicles
Will the art be in the name of the individual or held through a trust, company or foundation? This decision begs numerous questions, starting with the purpose and objectives of the collection, which are quite likely to change over time. If, as is possible, a fiduciary structure is used, it is vital that the trustee has a good understanding of the practicalities of art management. They have a responsibility to see that the collection is expertly managed.
Purpose of trusts
The settlor may wish to keep the collection for personal use in their own lifetime, but must address what the future holds for the collection after they die. If the family are to be involved in the future, they should be involved now, so that they have a good grasp of the philosophies and intentions. Depending on the significance and content of the collection, they may wish the art to be available to a wider public, for educational purposes, or create their own museum. Clarification of the purpose of a collection helps avoid disputes amongst the next generation.
Due diligence or provenance
How do you make sure you are buying exactly what you think you are buying? Through tracing the work back to the artist in an unbroken chain, with proper documentation for each stage. The quality of the evidence will not only ensure you avoid the classic mistake of acquiring paintings looted in World War II, it will significantly affect the value if and when you try to re-sell. Obviously such due diligence requires an expert eye, independent from the auction houses.
Storage
Storage conditions are vital to the preservation of artwork. Whether it is stored in a private home, storage facility or museum, are suitable and reliable temperature and humidity controls in place? These factors could alter the condition of the work and ultimate value.
Taxation and paperwork
Correct advice and paperwork is especially relevant when moving artwork across borders; oversights could result in very costly penalties. Import and export licences, as well as cultural licences must be completed according to the shipment.
There are significant tax consequences depending on whether it is owned in a personal name, by a trust, foundation or company. Furthermore, not only must you think of who owns it, but of who enjoys it. The art may be owned by a trust but on the walls of a beneficiary, which could trigger tax issues. This may be managed by having the correct agreements in place.
Insurance
Appropriate insurance for art and jewellery is key. Insurers must be kept up to date on movement of the works, especially if they are on loan or in transit. Artworks should be labelled with the correct ownership details and the insurance policies must be in accordance with these.
Conclusion
Owning and managing an art collection is a complex business requiring frequent advice from a variety of different experts. Unlike investment management, the art world is almost entirely unregulated. This is a sobering thought when one considers the immense nature of the assets in question, potential conflicts of interest and the consequences of ‘getting the tax wrong’. Independent strategic advice is not easy to find.
Sell everything? Managers reveal coping strategies for turbulent markets
Gerrit Smit, partner & head of equity investment, Stonehage Fleming
Look for companies with competitive edge We believe the best investment strategy at any time is to buy only outstanding businesses with a particular competitive edge against its competition, and making sure we do not pay anything more than a fair valuation for that business.
If we succeed in getting this combination right, we believe we will reap handsome returns over time. We invest for the sustainability of dividend growth to benefit from the power of compounding interest by holding an exceptional business until it becomes overvalued.
Clearly one of the most critical issues of investing is to not overpay for the asset. Nobody knows how low prices may fall, but we can value any business. As long as we do not pay anything more than a fair valuation, chances are that we will succeed with our investment.
The current market turmoil again offers such opportunities to buy excellent businesses below fair valuations. We currently have the opportunity to be very selective about the quality of the business we buy to hold for the long term, and switch out of any weaker franchises.