As major storms such as Hurricane Sandy increase in frequency, art collectors -- and their advisors -- need to be more vigilant about emergency evacuation plans and inventory management systems for valuable works of art, according to Katja Zigerlig, vice president for fine art and wine insurance at the AIG Private Client Group.
“People have to start thinking more about catastrophic events,” said Zigerlig, who gave a presentation on art trends Tuesday in Miami at an event sponsored by Northern Trust. “Natural disasters are occurring more frequently, and Hurricane Sandy was just the most recent example.
"My presentation was only a few blocks from the ocean," she added. "When I asked how many people in the audience who had an emergency evacuation plan in case of a storm, only a few people raised their hand.”
KNOW THE INVENTORY
Advisors should also make sure clients with valuable art collections have an inventory management system that is regularly updated, Zigerlig said. “After Hurricane Sandy, there were collectors who didn’t know what they had and what they could claim as a loss, because they didn’t have a list.
"It’s something people overlook, but they really can’t afford to,” she added
High- and ultra-high-net-worth clients who want to start an art collection should consider working with an art advisor, Zigerlig said, who also works with BNY Mellon and US Trust.
"The art market is unregulated and very opaque,” she noted. “A lot of knowledge is gleaned by cultivating relationships, and if you’re not part of that world, it’s very difficult to keep up. Art advisors know what’s going on and they can inform and educate a collector.”
MESSAGE TO CLIENTS: BUY WHAT YOU LIKE
Advise would-be collectors to make sure they genuinely enjoy the art they’re collecting, Zigerlig stressed. Buying works with an eye to quick turnaround sales is a risky proposition, she said: “This is a very cyclical market, where a long-term passion will serve you much better than short-term speculation.”
Collectors should have a firm budget in mind when beginning to work with an advisor, whose compensation is usually set by a negotiated hourly or project-based fee.
She recommended collectors and financial advisors beginning to research art advisors should start with the Association of Professional Art Advisors website.