Millennial Collectors and their Impact on Family-owned Art Collections in 2017
A new generation of wealth is emerging for which art is an important component of their overall wealth management strategy. Over the next several decades, the wealthiest generation in history will pass down an estimated $30 trillion in assets to their millennial children. This well educated; socially minded; and tech-savvy generation are also likely to have a major impact on the family owned art collection in 2017.
In addition to benefiting from the wealth of their baby boom parents, millennial collectors are expected to make a unique and very personal contribution to their family's art holdings for the following reasons:
- Millennials will want to define their own area of focus and collecting categories including making recommendations to expand, upgrade or refocus the family collection. Collection strategy will be challenged by the fact that this segment of the family will demonstrate very different behaviours compared to their parents.
- Growing up surrounded by an emphasis on diversity will have a major influence on the artists that millennial collectors will be inclined to support. These days younger generations are exposed to a broad range of emerging and international contemporary artists. Generational differences between millennials and their parents will drive individual art interests.
- There will be family obstacles that will potentially hamper millennials involvement. One classic roadblock may be the presence of a first generation collector who refuses to engage other family members because it involves giving up control and facing mortality. In some cases, this avoidance can be overcome by reminding them of the value in creating a collection strategy which bears their imprint, and will enable the younger generation to take over the collection when they are no longer able to continue.
- Unlike their parents, millennial collectors are more likely to view the family's art holdings as an investment and with the help of skilled advice can become an effective working asset. However, as they have yet to experience a significant downturn in the market millennials may also be in for a surprise regarding the future value of the family art.
- Once inheriting the family art they will wish to ensure it is preserved both during their lifetime and for future generations. However, there will be questions concerning whether millennials will have the organisational or financial resources to sustain and properly care for the collection.
- For families with fiduciary structures, millennials will want to be actively engaged in management of the art holding vehicle. Family art foundations and trusts will serve as a training ground, helping them to learn and practice the skills they will need to serve as future leaders of the family collection.
Over the next several decades, the biggest and wealthiest generation in history will transfer the family art to their millennial children. How these family-owned art collections will be managed in estate planning will have tremendous implications for collectors and their families, not to mention wealth management professionals.
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