A new survey sheds light on how the global rich (Irish included) invest their cash and why so-called ‘treasure’ still holds a fascination for many
THE AMERICAN writer F Scott Fitzgerald is often misquoted but here’s what he said about the rich in his 1926 short story, The Rich Boy: “Let me tell you about the very rich. They are different from you and me. They possess and enjoy early, and it does something to them, makes them soft, where we are hard, cynical where we are trustful, in a way that, unless you were born rich, it is very difficult to understand.”
Understanding the psychology of the rich is of major interest to fine art galleries, dealers and auctioneers given the vast sums of money currently being spent worldwide on art, antiques and various collectibles.
Earlier this year, the Wealth and Investment Management division of Barclays Bank undertook an international survey of rich clients to determine their attitude to investing in what the report called “treasure” – defined as assets such as precious jewellery, fine art, wine, antique furniture, classic cars and precious metals.
The survey was conducted in 17 countries in Europe, North and South America, the Middle East and the Asia-Pacific region. Ireland was included. Some 2,000 “high net-worth individuals” responded, 50 of them Irish.
The respondents all had over $1.5 million (or an equivalent amount) in investable assets and some 200 had more than $15 million.
The main finding in report titled Profit or Pleasure? Exploring the Motivations Behind Treasure Trends was that the global rich hold, on average, 9.6 per cent of their wealth in “treasure”.
Respondents from the United Arab Emirates topped the list with 18 per cent of their wealth held in treasure, followed by those from Saudi Arabia and China at 17 per cent. Among other notable results, the figure for the US was 9 per cent, the UK 7 per cent, Switzerland 6 per cent and India just 3 per cent. For Ireland, the figure was 10 per cent.
Precious jewellery is the most popular asset with 70 per cent of respondents owning some; followed by art at 49 per cent and then antique furniture 37 per cent.
Jewellery’s international popularity is hardly surprising since, as the report points out, it “does not require upkeep and will generally not deteriorate over time” unlike, for example cars or real estate, and “can be easily transported in the event of an emergency”.
Eyebrows may be raised at the appearance on the list of stamp collecting – surely a pastime on the decline? – with no fewer than 17 per cent of respondents claiming to have a collection.
The report notes that “with traditional financial markets still highly volatile and interest rates at record lows, the possibility that art, wine, antiques and other collectibles could earn a handsome return . . . is certainly alluring”. But, the report cautions that owning such items “can involve high transaction, storage, insurance and appraisal costs” and “are susceptible to vagaries in fashion”.
Despite increased public interest and record prices being set at auction, the report finds that investors are far more likely to buy treasure assets for emotional, rather than financial reasons,
In any case, the rich don’t buy art for purely investment purposes. Overall the report uncovers that “investing in treasure in most parts of the world is more about enjoyment than financial returns”.
The survey found that only 18 per cent of respondents “own treasure solely for its financial characteristics”.
Instead, “for many collectors, the cost and financial risk of treasure are irrelevant given the intellectual stimulation and aesthetic pleasure it brings to them”.
The research, which was conducted by Ledbury Research, also found varying attitudes among different age groups. Fine art and antiques tend to be more popular amongst older individuals, while the younger generation prefers cars, wine, precious metals and jewellery.
In general, wealthy younger people also tend to hold a higher proportion of their total wealth in treasure assets, which, according to the report, experts have attributed in part to “young people’s willingness to adopt higher-risk investment strategies”.
According to Pat McCormack, the head of wealth management at Barclays’ Dublin office, Irish respondents were “in line with the global average” and hold 10 per cent of their wealth in the form of treasure.
“In Ireland, precious jewellery is also the most popular treasure asset, with 60 per cent of Irish respondents investing in it followed by fine art (35 per cent) and antiques, 19 per cent.”
The report also found that wealthy Irish collectors often require a very high price increase before they would consider selling on their treasure.
For example, Irish owners of fine art report a need for an 86 per cent price increase in the year after purchase before they are willing to consider a sale compared to the global average of 62 per cent.
Additionally, almost two-thirds (63 per cent) of the Irish respondents consider at least one of their treasure assets to be “priceless” and “would not part with it at any price”.
McCormack said that Barclays had hundreds of clients in Ireland and that “there is significant wealth in the country”.
His advice? “Treasure may, if you’re lucky or very knowledgeable, give you a financial return, but buy something you enjoy and it will always give you an emotional return.”
The most-popular 'treasures'
Precious jewellery
Fine art pictures and paintings
Antique furniture
Precious metals
Wine
Fine art tapestry and rugs
Fine art sculptures
Classic automobiles
Coin/stamp collections
Auction results:
Monday, August 6th Dolan’s Irish art auction at Ballynahinch Castle Hotel, Connemara, Co Galway. Connemara Mare and Foal (drawing) by Jack B Yeats, below, €14,000 (€8,000–€12,000); Winter Farm by Kenneth Webb, €8,500 (€4,200-€4,800); Home from the Fields by Markey Robinson, €8,000 (€8,000-€10,000); Peony White by Mark O’Neill, €5,600 (€6,500-€7,500); Red As Night by Norah McGuinness, €5,500 (€4,000-€5,000).
Sunday, August 12th Dolan’s Irish Art Auction, Bantry House, West Cork. In Tom’s Yard by Mark O’Neill, €4,500 (€4,500-€6,000); Glamour by Charles Harper, €4,500 (€4,500-€6,500); Summer Grazing by the River by Arthur Maderson, €4,200 (€2,800-€3,500).
Tuesday, August 14th John Weldon Auctioneers, Cow’s Lane, Temple Bar, Dublin. Auction of jewellery, silver and gold. A diamond solitaire ring (2.10cts), €6,200 (€5,000-€7,000; a gold diamond and emerald-set bird brooch €710 (€400-€600; a Falkland Islands gold £2 coin, €220 (€220-€280).
Tuesday, August 14th Hegarty’s Auction Rooms, Bandon, Co Cork. A marquetry inlaid longcase grandfather clock, with square dial, by Thomas Wheeler, London, €2,400 (€2,000-€4,000).
Forthcoming Auctions
Tuesday, August 21st Ashgrove Auction Rooms, Ballybrittas, Portlaoise, Co Laois. Antiques auction at 2pm to include “Militaria and Breweriana.”
Wednesday, August 22nd Limerick Auction Rooms, Ballysimon Road, Limerick. Antiques auction at 11.30am.
Forthcoming Fairs
Sunday, August 19th Antiques Fair, Trim Castle Hotel, Co Meath. Noon-6pm
Sunday, August 19th Antiques Fair, Celtic Ross Hotel, Rosscarbery, Co. Cork. 11 am-6pm
