To Have and to Hold: Despite High-Profile Sales, Art Collectors Largely Driven by Legacy and Love

Many wealthy enthusiasts are uninterested in parting with works, choosing instead to pass down collections to heirs

New UBS Investor Watch Pulse Report, "For the love of art," offers insights on US-based collectors' behaviors and buying trends

Key Findings:

• 65% of those surveyed have never sold any works of art/objects from their collection
• 88% of collectors do not have an art advisor to guide their purchases
• 26% of art collectors have purchased art online, sight unseen
• While 87% of wealthy collectors plan to leave their collection to heirs, 57% have not taken steps to educate them on how to manage, appraise and/or sell their collection
• Among those surveyed, Art Basel in Miami Beach is the top art event attended by collectors

UBS Wealth Management Americas released today a new report that shows a majority of collectors of fine art view their art collections as a pursuit of passion rather than as an investment. In a special Investor Watch Pulse Report, released during Art Basel in Miami Beach, UBS studied the attitudes and behaviors of fine art collectors. The report, titled "For the love of art," found that despite recent high profile sales of fine art at auction houses this year, such as Leonardo da Vinci's, "Salvator Mundi, c. 1500" and Basquiat's "Untitled, 1982," 65% of investors noted they have never sold a piece from their collection, and 41% confessed they have never had their collection appraised.

Art collectors opt for passion over investment

When it comes to collecting behaviors, art collectors find themselves driven by an appreciation for beauty (71%), a desire to follow their passions (54%) and a wish to support and nurture artists (32%). Moreover, one quarter of investors consider their collections to be priceless, further emphasizing the fact that passion, rather than profit, is a motivating factor.

"Collecting is a passion that we share with many of our clients who are developing alternative legacies through their cultural pursuits. Collectors don't apply the same principles to buying art that they would to a typical investment portfolio of stocks and bonds," said John Mathews, Head of Private Wealth Management and Ultra High Net Worth, UBS Americas. "It is important, however, to institute management structures to ensure their legacy remains protected, correctly valued and insured."

Collectors overwhelmingly seek purchase advice from alternative sources

Eighty-eight percent of collectors do not use an art advisor to guide their purchases. The report found that the collector's first step in the purchase journey is to seek advice from other sources. Sixty-two percent of collectors cite using galleries to educate themselves on fine art purchases. This is followed by online resources (60%), museums (50%) and magazines (44%). Most surprisingly, one in four collectors admit to purchasing art online, sight unseen. This gravitation toward alternative sources, in particular digital, underscores the evolution of the art buyer's journey and how the industry will need to adapt to keep pace.

Heirs' attitudes vary on maintaining a collection's legacy

The data also presents evidence that passion for art transcends generations, whereas other collections (coins, stamps, jewelry) do not. Collectors of fine art, overwhelmingly, plan to leave their art to heirs rather than sell it (87%). According to the report, 90% of heirs felt "honored" to inherit an art collection, and 81% intend to keep it. In contrast only 35% of heirs who received other collectibles, including coins, stamps and jewelry, were interested in it, according to a recent Investor Watch Report called "For love not money," published November 9, 2017.

Yet, despite the interest in maintaining a legacy, 57% of art collectors have not taken steps to educate their heirs on how to manage, appraise and/or sell their collection.

"We're seeing sentimental value tends to supersede financial value," said Sameer Aurora, Head of Client Strategy, UBS Wealth Management Americas. "Collectors do not appear driven by the monetary worth of their art collection, and therefore are often unaware of its true value."

Notes to Editors:

About UBS Investor Watch

UBS Wealth Management Americas surveys U.S. investors on a quarterly basis to keep a pulse on their needs, goals and concerns. After identifying several emerging trends in the survey data, UBS decided in 2012 to create the UBS Investor Watch to track, analyze and report the sentiment of affluent and high net worth investors. For more information on Investor Watch, visit ubs.com/investorwatch.

About UBS Investor Watch Pulse Report

The UBS Investor Watch Pulse Report is designed as a quick take on topical issues of the day. In addition to this report, For the love of art, UBS has published Redefining expectations: Women entrepreneurs are overcoming barriers to succeed (April 2017) and Eagerly awaiting results: Business owners anticipate tax reform (November 2017). Click here to view and download the report and Visit ubs.com/investorwatch to see all reports.

Methodology

For this twenty-first edition of UBS Investor Watch, we surveyed 2,475 US-based high net worth investors (with at least $1 million in investable assets) from September 15–25, 2017, including 608 with at least $5 million. The survey included 363 art collectors, who are the focus of this Investor Watch Pulse Report.

About UBS Wealth Management Americas

Wealth Management Americas is one of the leading wealth managers in the Americas in terms of Financial Advisor productivity and invested assets. Its business includes UBS's domestic U. S. and Canadian wealth management businesses, as well as international business booked in the U.S. It provides a fully integrated set of wealth management solutions designed to address the needs of ultra high net worth and high net worth clients.

About UBS

UBS provides financial advice and solutions to wealthy, institutional and corporate clients worldwide, as well as private clients in Switzerland. The operational structure of the Group is comprised of our Corporate Center and five business divisions: Wealth Management, Wealth Management Americas, Personal & Corporate Banking, Asset Management and the Investment Bank. UBS's strategy builds on the strengths of all of its businesses and focuses its efforts on areas in which it excels, while seeking to capitalize on the compelling growth prospects in the businesses and regions in which it operates, in order to generate attractive and sustainable returns for its shareholders. All of its businesses are capital-efficient and benefit from a strong competitive position in their targeted markets.

UBS is present in all major financial centers worldwide. It has offices in 54 countries, with about 34% of its employees working in the Americas, 35% in Switzerland, 18% in the rest of Europe, the Middle East and Africa and 13% in Asia Pacific. UBS Group AG employs approximately 60,000 people around the world. Its shares are listed on the SIX Swiss Exchange and the New York Stock Exchange (NYSE).

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