Crestbridge Family Office Services, which is not part of this transaction, will continue to operate independently and provide its private client, trust and fiduciary services whilst remaining privately owned. It will continue to support its clients and their advisers with the same commitment and dedication they have experienced over the last ten years.

Having joined Crestbridge ten years ago to establish Family Office Services, Heather Tibbo now takes the reins as Chief Executive Officer with Paul Hunter as Managing Director. They will continue to be supported by the current team of Family Office Services professionals ensuring continuity of services and relationships.

Chief Executive, Heather Tibbo, said:

“Over the last ten years, Crestbridge Family Office Services has demonstrated a clear focus on its specialism for families and ultra-high net-worth clients and advisers. I am excited about the future for our business, our people, and the continuing opportunity to grow and develop our array of services, delivering excellence to our clients and advisers whose interests I firmly believe are best served by our remaining independent.”

The mid-year promotions, which took effect from 1 July 2023, include Clare Stotesbury, who becomes an Associate Director.

In addition, Charlotte Williamson has been made a Senior Manager whilst Melloney Bond has been promoted to Manager, and both Hannah Le Claire and Joel Lucas-Villar become Senior Administrators.

All five have been promoted in recognition of their achievements, expertise and contribution to the business.

Congratulating those promoted, Heather Tibbo, Group Head of Crestbridge Family Office Services, said:

“Client service remains front and centre of our proposition and delivering that means nurturing a high quality, driven and highly knowledgeable team. With that in mind, I’m delighted that five of our professionals have received promotions in recognition of the contribution they have made to the business over the past year, and their ongoing commitment to their own professional development.”

Sophie won Gold in the ‘Business Development Manager of the Year’ category, with the accolades being presented at an Awards ceremony held in London this week (20th June).

Now in their eighth year, the Awards recognise the best brands across the private wealth landscape and champion the individuals and teams driving positive change and demonstrating best practice across the marketing, business development, public relations and communications sectors.

Sophie, who joined Crestbridge in January this year, has built a career as a business development specialist over the past ten years, working across the trust and company service provider sector in Jersey to support strategic business goals. As well as working with colleagues to facilitate the onboarding of new clients, Sophie also supports the team’s marketing efforts and is a champion for the business’ client relationship-driven approach. She holds the STEP Diploma in International Trust Management and the ICA International Diploma in Anti Money Laundering.

Commenting on Sophie’s success, Daniel Channing, Director, Crestbridge Family Office Services, said: “In a highly competitive market, it’s imperative that we effectively communicate how we differentiate ourselves.  I’m delighted for Sophie – she has contributed to our business development strategy this year and her efforts, along with those of our wider marketing and business development team, have proved pivotal in cementing our positive reputation.”

Jersey-based Directors Danielle Cottignies and Laura Parkes are included in the ePrivateClient Channel Islands NextGen Leaders List – previously the ‘Top 35 Under 35’ list – published last week. The list recognises and celebrates rising stars from across Jersey and Guernsey’s private client landscape.

In compiling the list, the publication considered a number of factors, including individual achievements over the past 12 months, and career progression.

Danielle was one of the first to join Crestbridge Family Office Services in 2014, rising swiftly to become the team’s youngest director. She leads a large client team and manages several key family office structures, including for Middle Eastern clients that involve multiple asset classes, Shari’a-compliant structures, and multi-jurisdictional factors. She is also a leader within the business in understanding the risks and opportunities of structures with ESG investment and monitoring requirements.

Laura’s career in fiduciary services spans 18 years, joining the Crestbridge team in 2022. She is responsible for a number of mid-cap client family office relationships and leads a team who service over 60 entities. She also supports the firm’s clients with US connections and has supported the onboarding  of new high-profile relationships. Laura is a member of the Society of Trust and Estate Practitioners.

Paul Hunter, Group Head, Crestbridge Family Office Services, said: “Crestbridge has a strong track record in attracting and nurturing talent, and that’s reflected in the inclusion of two of our team in this list celebrating young and emerging Channel Islands leaders. I’m delighted for Danielle and Laura, who have both made huge contributions over the past year. Their approach, attitude and commitment mirrors the values we share as a team.”

This article was published in ALM’s The Month – Luxury Assets Magazine – May 2023

The indications are that wealthy families continue to hold some form of luxury asset within their investment portfolios. Such assets make up some 5% of investable wealth on average – that’s the same proportion as gold and crypto assets combined (Knight Frank Wealth Report 2023).

And possibly with good reason – the latest Knight Frank Luxury Investment Index rose by a healthy 16% during 2022, beating inflation and outperforming most mainstream investment classes. Art was the top performer, growing by 29%, according to the Index, with classic cars rising 25%.

There is, however, some differential within the sector – wine grew 10% (down from 16% the previous year), while whisky was up just 3%.

Often for families, returns when it comes to luxury assts are not necessarily the be all and end all – they are ultimately investments of passion, sentiment, interest and lifestyle. Yachts and private planes, for instance, may meet the lifestyle requirements of a family, but they are notoriously expensive assets to hold, depreciating in value and delivering very little, if any, income return.

But when do non-income generating luxury assets become a problem for the family strategy more widely – particularly with total UHNWI wealth having been eroded by some 10% last year against challenging and high inflation versus previous years market conditions (Knight Frank), and with the nextgen continuing to take more of an interest in driving family portfolios?

Fresh Look

With almost a third of wealthy private investors targeting capital growth this year (Knight Frank), the role of luxury assets within a portfolio may well become part of the conversations between advisers and their clients in the coming months, as they take a fresh look at how hard their investments are working and how they could be put to work harder to generate returns.

Crucial in this scenario is looking at where luxury assets sit within the wider portfolio and the family’s wealth strategy holistically. Often, of course, family wealth creators are emotionally tied to their luxury assets and may well consider them to be part of their family legacy. At the same time, though, those assets may well be at odds with the shifting priorities and values of the increasingly influential nextgen.

In any situation, of course, a family will want to avoid the potential for future disputes – and advisers have a crucial role to play in putting in place measures from the outset that can reduce that risk.

At the heart of this is good governance. Advisers with a focus on nurturing close, positive relationships with their clients are best placed to deliver on that. By understanding their clients, bringing all stakeholders to the table, advisers can establish clearly what a family’s fundamental values are and what its shared vision is.

Is there, for example, a mismatch between what a family says its core values are, and what is reflected through its existing portfolio allocation and the luxury assets within it? Does it ‘fit’?

Equally, deep conversations with an adviser can reveal whether there is a concentration risk when it comes to luxury assets, which often have high or fluctuating valuations. One piece of art can significantly shift in value, up or down, for instance, and make a considerable impact on the total wealth valuation – which in turn could impact its risk profile. An adviser can in this instance guide a family as to whether there is a need to think about diversifying to meet its overall wealth objectives.

Indeed, when it comes to luxury assets, families should see it as an opportunity to make sure they have robust, independent, good quality legal and advisory frameworks in place to avoid current and future intergenerational disputes.

All this can subsequently be documented through the family charter, investment strategy, letters of wishes and other documentation, providing a clear framework that should help guide them in an area that is so easily impacted by individual sentimental and emotional preferences.

Practicalities

Balancing the growth, purpose and legacy objectives can be a tricky task but, with a foundation of good governance and sound documentation, there is still undoubtedly a place for luxury assets within a wider portfolio.

There are some practicalities, though, that can help ensure such assets are properly managed and structured.

First and foremost, luxury assets frequently require specialist expertise if they are to be managed effectively. That might mean, for instance, getting specialist insurance advice where family art may be moved across borders, or drawing on yacht management services to administer crew and ensure adequate marine insurance is in place. Bringing in the right expertise early can dramatically reduce risk in the long run.

Taking a view on a family’s structures and whether they offer enough, or too much, flexibility in terms of holding assets is another practical point that should be addressed.

Luxury assets are often acquired to be enjoyed by a family – art, jewellery, or vintage cars for example. Others, such as fine wine or whisky, may form part of a collection. Whatever the approach, choosing the right structure is an important factor in achieving the desired and proportionate flexibility – protecting the assets while allowing a family to enjoy those assets too.

Ownership is a key question too when it comes to structuring luxury assets – regrettably there can be instances where question marks over ownership of an asset can lead to inter-family disputes. The case of Robert Tibbles, a collector of contemporary art, and one of his pieces of artwork, a Damien Hirst painting entitled ‘Beautiful tropical, jungle painting (with pink snot)’, is a case in point. Robert’s father, Nigel, and twin brother, Sebastian, sued him over ownership of the piece when it was sold, leading to an unfortunate and bitter family dispute – clear structuring played a key part in resolving that case.

In addition, if structured appropriately, it may well be possible for non-income generating luxury assets such as art to be used as leverage to generate capital liquidity – thereby meeting the needs of both the wealth creator and the nextgen, without directly impacting the asset itself.

Evolution

As families look to a new era of investment, shaped by the need to balance their own growth ambitions with the desire for purpose-driven investment and a need to integrate the values of the nextgen, advisers have a responsibility to ensure luxury assets are managed and structured appropriately as part of a family’s holistic wealth management strategy.

Really understanding the needs and ambitions of a family as a whole by cultivating a close relationship with them is critical in establishing a robust governance framework that can cater for the appetite to hold luxury assets on the one hand with the need to generate returns on the other. By taking a number of practical steps -from establishing good oversight models and structuring to seeking specialist expertise where needed – luxury assets can continue to provide both the family enjoyment and legacy they promise, and play a role as part of a wider investment portfolio.

This article was published in ALM’s The Month – Luxury Assets Magazine – May 2023

The indications are that wealthy families continue to hold some form of luxury asset within their investment portfolios. Such assets make up some 5% of investable wealth on average – that’s the same proportion as gold and crypto assets combined (Knight Frank Wealth Report 2023).

And possibly with good reason – the latest Knight Frank Luxury Investment Index rose by a healthy 16% during 2022, beating inflation and outperforming most mainstream investment classes. Art was the top performer, growing by 29%, according to the Index, with classic cars rising 25%.

There is, however, some differential within the sector – wine grew 10% (down from 16% the previous year), while whisky was up just 3%.

Often for families, returns when it comes to luxury assts are not necessarily the be all and end all – they are ultimately investments of passion, sentiment, interest and lifestyle. Yachts and private planes, for instance, may meet the lifestyle requirements of a family, but they are notoriously expensive assets to hold, depreciating in value and delivering very little, if any, income return.

But when do non-income generating luxury assets become a problem for the family strategy more widely – particularly with total UHNWI wealth having been eroded by some 10% last year against challenging and high inflation versus previous years market conditions (Knight Frank), and with the nextgen continuing to take more of an interest in driving family portfolios?

Fresh Look

With almost a third of wealthy private investors targeting capital growth this year (Knight Frank), the role of luxury assets within a portfolio may well become part of the conversations between advisers and their clients in the coming months, as they take a fresh look at how hard their investments are working and how they could be put to work harder to generate returns.

Crucial in this scenario is looking at where luxury assets sit within the wider portfolio and the family’s wealth strategy holistically. Often, of course, family wealth creators are emotionally tied to their luxury assets and may well consider them to be part of their family legacy. At the same time, though, those assets may well be at odds with the shifting priorities and values of the increasingly influential nextgen.

In any situation, of course, a family will want to avoid the potential for future disputes – and advisers have a crucial role to play in putting in place measures from the outset that can reduce that risk.

At the heart of this is good governance. Advisers with a focus on nurturing close, positive relationships with their clients are best placed to deliver on that. By understanding their clients, bringing all stakeholders to the table, advisers can establish clearly what a family’s fundamental values are and what its shared vision is.

Is there, for example, a mismatch between what a family says its core values are, and what is reflected through its existing portfolio allocation and the luxury assets within it? Does it ‘fit’?

Equally, deep conversations with an adviser can reveal whether there is a concentration risk when it comes to luxury assets, which often have high or fluctuating valuations. One piece of art can significantly shift in value, up or down, for instance, and make a considerable impact on the total wealth valuation – which in turn could impact its risk profile. An adviser can in this instance guide a family as to whether there is a need to think about diversifying to meet its overall wealth objectives.

Indeed, when it comes to luxury assets, families should see it as an opportunity to make sure they have robust, independent, good quality legal and advisory frameworks in place to avoid current and future intergenerational disputes.

All this can subsequently be documented through the family charter, investment strategy, letters of wishes and other documentation, providing a clear framework that should help guide them in an area that is so easily impacted by individual sentimental and emotional preferences.

Practicalities

Balancing the growth, purpose and legacy objectives can be a tricky task but, with a foundation of good governance and sound documentation, there is still undoubtedly a place for luxury assets within a wider portfolio.

There are some practicalities, though, that can help ensure such assets are properly managed and structured.

First and foremost, luxury assets frequently require specialist expertise if they are to be managed effectively. That might mean, for instance, getting specialist insurance advice where family art may be moved across borders, or drawing on yacht management services to administer crew and ensure adequate marine insurance is in place. Bringing in the right expertise early can dramatically reduce risk in the long run.

Taking a view on a family’s structures and whether they offer enough, or too much, flexibility in terms of holding assets is another practical point that should be addressed.

Luxury assets are often acquired to be enjoyed by a family – art, jewellery, or vintage cars for example. Others, such as fine wine or whisky, may form part of a collection. Whatever the approach, choosing the right structure is an important factor in achieving the desired and proportionate flexibility – protecting the assets while allowing a family to enjoy those assets too.

Ownership is a key question too when it comes to structuring luxury assets – regrettably there can be instances where question marks over ownership of an asset can lead to inter-family disputes. The case of Robert Tibbles, a collector of contemporary art, and one of his pieces of artwork, a Damien Hirst painting entitled ‘Beautiful tropical, jungle painting (with pink snot)’, is a case in point. Robert’s father, Nigel, and twin brother, Sebastian, sued him over ownership of the piece when it was sold, leading to an unfortunate and bitter family dispute – clear structuring played a key part in resolving that case.

In addition, if structured appropriately, it may well be possible for non-income generating luxury assets such as art to be used as leverage to generate capital liquidity – thereby meeting the needs of both the wealth creator and the nextgen, without directly impacting the asset itself.

Evolution

As families look to a new era of investment, shaped by the need to balance their own growth ambitions with the desire for purpose-driven investment and a need to integrate the values of the nextgen, advisers have a responsibility to ensure luxury assets are managed and structured appropriately as part of a family’s holistic wealth management strategy.

Really understanding the needs and ambitions of a family as a whole by cultivating a close relationship with them is critical in establishing a robust governance framework that can cater for the appetite to hold luxury assets on the one hand with the need to generate returns on the other. By taking a number of practical steps -from establishing good oversight models and structuring to seeking specialist expertise where needed – luxury assets can continue to provide both the family enjoyment and legacy they promise, and play a role as part of a wider investment portfolio.

This article was published in ALM’s The Month – Luxury Assets Magazine – May 2023

The indications are that wealthy families continue to hold some form of luxury asset within their investment portfolios. Such assets make up some 5% of investable wealth on average – that’s the same proportion as gold and crypto assets combined (Knight Frank Wealth Report 2023).

And possibly with good reason – the latest Knight Frank Luxury Investment Index rose by a healthy 16% during 2022, beating inflation and outperforming most mainstream investment classes. Art was the top performer, growing by 29%, according to the Index, with classic cars rising 25%.

There is, however, some differential within the sector – wine grew 10% (down from 16% the previous year), while whisky was up just 3%.

Often for families, returns when it comes to luxury assts are not necessarily the be all and end all – they are ultimately investments of passion, sentiment, interest and lifestyle. Yachts and private planes, for instance, may meet the lifestyle requirements of a family, but they are notoriously expensive assets to hold, depreciating in value and delivering very little, if any, income return.

But when do non-income generating luxury assets become a problem for the family strategy more widely – particularly with total UHNWI wealth having been eroded by some 10% last year against challenging and high inflation versus previous years market conditions (Knight Frank), and with the nextgen continuing to take more of an interest in driving family portfolios?

Fresh Look

With almost a third of wealthy private investors targeting capital growth this year (Knight Frank), the role of luxury assets within a portfolio may well become part of the conversations between advisers and their clients in the coming months, as they take a fresh look at how hard their investments are working and how they could be put to work harder to generate returns.

Crucial in this scenario is looking at where luxury assets sit within the wider portfolio and the family’s wealth strategy holistically. Often, of course, family wealth creators are emotionally tied to their luxury assets and may well consider them to be part of their family legacy. At the same time, though, those assets may well be at odds with the shifting priorities and values of the increasingly influential nextgen.

In any situation, of course, a family will want to avoid the potential for future disputes – and advisers have a crucial role to play in putting in place measures from the outset that can reduce that risk.

At the heart of this is good governance. Advisers with a focus on nurturing close, positive relationships with their clients are best placed to deliver on that. By understanding their clients, bringing all stakeholders to the table, advisers can establish clearly what a family’s fundamental values are and what its shared vision is.

Is there, for example, a mismatch between what a family says its core values are, and what is reflected through its existing portfolio allocation and the luxury assets within it? Does it ‘fit’?

Equally, deep conversations with an adviser can reveal whether there is a concentration risk when it comes to luxury assets, which often have high or fluctuating valuations. One piece of art can significantly shift in value, up or down, for instance, and make a considerable impact on the total wealth valuation – which in turn could impact its risk profile. An adviser can in this instance guide a family as to whether there is a need to think about diversifying to meet its overall wealth objectives.

Indeed, when it comes to luxury assets, families should see it as an opportunity to make sure they have robust, independent, good quality legal and advisory frameworks in place to avoid current and future intergenerational disputes.

All this can subsequently be documented through the family charter, investment strategy, letters of wishes and other documentation, providing a clear framework that should help guide them in an area that is so easily impacted by individual sentimental and emotional preferences.

Practicalities

Balancing the growth, purpose and legacy objectives can be a tricky task but, with a foundation of good governance and sound documentation, there is still undoubtedly a place for luxury assets within a wider portfolio.

There are some practicalities, though, that can help ensure such assets are properly managed and structured.

First and foremost, luxury assets frequently require specialist expertise if they are to be managed effectively. That might mean, for instance, getting specialist insurance advice where family art may be moved across borders, or drawing on yacht management services to administer crew and ensure adequate marine insurance is in place. Bringing in the right expertise early can dramatically reduce risk in the long run.

Taking a view on a family’s structures and whether they offer enough, or too much, flexibility in terms of holding assets is another practical point that should be addressed.

Luxury assets are often acquired to be enjoyed by a family – art, jewellery, or vintage cars for example. Others, such as fine wine or whisky, may form part of a collection. Whatever the approach, choosing the right structure is an important factor in achieving the desired and proportionate flexibility – protecting the assets while allowing a family to enjoy those assets too.

Ownership is a key question too when it comes to structuring luxury assets – regrettably there can be instances where question marks over ownership of an asset can lead to inter-family disputes. The case of Robert Tibbles, a collector of contemporary art, and one of his pieces of artwork, a Damien Hirst painting entitled ‘Beautiful tropical, jungle painting (with pink snot)’, is a case in point. Robert’s father, Nigel, and twin brother, Sebastian, sued him over ownership of the piece when it was sold, leading to an unfortunate and bitter family dispute – clear structuring played a key part in resolving that case.

In addition, if structured appropriately, it may well be possible for non-income generating luxury assets such as art to be used as leverage to generate capital liquidity – thereby meeting the needs of both the wealth creator and the nextgen, without directly impacting the asset itself.

Evolution

As families look to a new era of investment, shaped by the need to balance their own growth ambitions with the desire for purpose-driven investment and a need to integrate the values of the nextgen, advisers have a responsibility to ensure luxury assets are managed and structured appropriately as part of a family’s holistic wealth management strategy.

Really understanding the needs and ambitions of a family as a whole by cultivating a close relationship with them is critical in establishing a robust governance framework that can cater for the appetite to hold luxury assets on the one hand with the need to generate returns on the other. By taking a number of practical steps -from establishing good oversight models and structuring to seeking specialist expertise where needed – luxury assets can continue to provide both the family enjoyment and legacy they promise, and play a role as part of a wider investment portfolio.

This article was published in ALM’s The Month – Luxury Assets Magazine – May 2023

The indications are that wealthy families continue to hold some form of luxury asset within their investment portfolios. Such assets make up some 5% of investable wealth on average – that’s the same proportion as gold and crypto assets combined (Knight Frank Wealth Report 2023).

And possibly with good reason – the latest Knight Frank Luxury Investment Index rose by a healthy 16% during 2022, beating inflation and outperforming most mainstream investment classes. Art was the top performer, growing by 29%, according to the Index, with classic cars rising 25%.

There is, however, some differential within the sector – wine grew 10% (down from 16% the previous year), while whisky was up just 3%.

Often for families, returns when it comes to luxury assts are not necessarily the be all and end all – they are ultimately investments of passion, sentiment, interest and lifestyle. Yachts and private planes, for instance, may meet the lifestyle requirements of a family, but they are notoriously expensive assets to hold, depreciating in value and delivering very little, if any, income return.

But when do non-income generating luxury assets become a problem for the family strategy more widely – particularly with total UHNWI wealth having been eroded by some 10% last year against challenging and high inflation versus previous years market conditions (Knight Frank), and with the nextgen continuing to take more of an interest in driving family portfolios?

Fresh Look

With almost a third of wealthy private investors targeting capital growth this year (Knight Frank), the role of luxury assets within a portfolio may well become part of the conversations between advisers and their clients in the coming months, as they take a fresh look at how hard their investments are working and how they could be put to work harder to generate returns.

Crucial in this scenario is looking at where luxury assets sit within the wider portfolio and the family’s wealth strategy holistically. Often, of course, family wealth creators are emotionally tied to their luxury assets and may well consider them to be part of their family legacy. At the same time, though, those assets may well be at odds with the shifting priorities and values of the increasingly influential nextgen.

In any situation, of course, a family will want to avoid the potential for future disputes – and advisers have a crucial role to play in putting in place measures from the outset that can reduce that risk.

At the heart of this is good governance. Advisers with a focus on nurturing close, positive relationships with their clients are best placed to deliver on that. By understanding their clients, bringing all stakeholders to the table, advisers can establish clearly what a family’s fundamental values are and what its shared vision is.

Is there, for example, a mismatch between what a family says its core values are, and what is reflected through its existing portfolio allocation and the luxury assets within it? Does it ‘fit’?

Equally, deep conversations with an adviser can reveal whether there is a concentration risk when it comes to luxury assets, which often have high or fluctuating valuations. One piece of art can significantly shift in value, up or down, for instance, and make a considerable impact on the total wealth valuation – which in turn could impact its risk profile. An adviser can in this instance guide a family as to whether there is a need to think about diversifying to meet its overall wealth objectives.

Indeed, when it comes to luxury assets, families should see it as an opportunity to make sure they have robust, independent, good quality legal and advisory frameworks in place to avoid current and future intergenerational disputes.

All this can subsequently be documented through the family charter, investment strategy, letters of wishes and other documentation, providing a clear framework that should help guide them in an area that is so easily impacted by individual sentimental and emotional preferences.

Practicalities

Balancing the growth, purpose and legacy objectives can be a tricky task but, with a foundation of good governance and sound documentation, there is still undoubtedly a place for luxury assets within a wider portfolio.

There are some practicalities, though, that can help ensure such assets are properly managed and structured.

First and foremost, luxury assets frequently require specialist expertise if they are to be managed effectively. That might mean, for instance, getting specialist insurance advice where family art may be moved across borders, or drawing on yacht management services to administer crew and ensure adequate marine insurance is in place. Bringing in the right expertise early can dramatically reduce risk in the long run.

Taking a view on a family’s structures and whether they offer enough, or too much, flexibility in terms of holding assets is another practical point that should be addressed.

Luxury assets are often acquired to be enjoyed by a family – art, jewellery, or vintage cars for example. Others, such as fine wine or whisky, may form part of a collection. Whatever the approach, choosing the right structure is an important factor in achieving the desired and proportionate flexibility – protecting the assets while allowing a family to enjoy those assets too.

Ownership is a key question too when it comes to structuring luxury assets – regrettably there can be instances where question marks over ownership of an asset can lead to inter-family disputes. The case of Robert Tibbles, a collector of contemporary art, and one of his pieces of artwork, a Damien Hirst painting entitled ‘Beautiful tropical, jungle painting (with pink snot)’, is a case in point. Robert’s father, Nigel, and twin brother, Sebastian, sued him over ownership of the piece when it was sold, leading to an unfortunate and bitter family dispute – clear structuring played a key part in resolving that case.

In addition, if structured appropriately, it may well be possible for non-income generating luxury assets such as art to be used as leverage to generate capital liquidity – thereby meeting the needs of both the wealth creator and the nextgen, without directly impacting the asset itself.

Evolution

As families look to a new era of investment, shaped by the need to balance their own growth ambitions with the desire for purpose-driven investment and a need to integrate the values of the nextgen, advisers have a responsibility to ensure luxury assets are managed and structured appropriately as part of a family’s holistic wealth management strategy.

Really understanding the needs and ambitions of a family as a whole by cultivating a close relationship with them is critical in establishing a robust governance framework that can cater for the appetite to hold luxury assets on the one hand with the need to generate returns on the other. By taking a number of practical steps -from establishing good oversight models and structuring to seeking specialist expertise where needed – luxury assets can continue to provide both the family enjoyment and legacy they promise, and play a role as part of a wider investment portfolio.

This article was published in ALM’s The Month – Luxury Assets Magazine – May 2023

The indications are that wealthy families continue to hold some form of luxury asset within their investment portfolios. Such assets make up some 5% of investable wealth on average – that’s the same proportion as gold and crypto assets combined (Knight Frank Wealth Report 2023).

And possibly with good reason – the latest Knight Frank Luxury Investment Index rose by a healthy 16% during 2022, beating inflation and outperforming most mainstream investment classes. Art was the top performer, growing by 29%, according to the Index, with classic cars rising 25%.

There is, however, some differential within the sector – wine grew 10% (down from 16% the previous year), while whisky was up just 3%.

Often for families, returns when it comes to luxury assts are not necessarily the be all and end all – they are ultimately investments of passion, sentiment, interest and lifestyle. Yachts and private planes, for instance, may meet the lifestyle requirements of a family, but they are notoriously expensive assets to hold, depreciating in value and delivering very little, if any, income return.

But when do non-income generating luxury assets become a problem for the family strategy more widely – particularly with total UHNWI wealth having been eroded by some 10% last year against challenging and high inflation versus previous years market conditions (Knight Frank), and with the nextgen continuing to take more of an interest in driving family portfolios?

Fresh Look

With almost a third of wealthy private investors targeting capital growth this year (Knight Frank), the role of luxury assets within a portfolio may well become part of the conversations between advisers and their clients in the coming months, as they take a fresh look at how hard their investments are working and how they could be put to work harder to generate returns.

Crucial in this scenario is looking at where luxury assets sit within the wider portfolio and the family’s wealth strategy holistically. Often, of course, family wealth creators are emotionally tied to their luxury assets and may well consider them to be part of their family legacy. At the same time, though, those assets may well be at odds with the shifting priorities and values of the increasingly influential nextgen.

In any situation, of course, a family will want to avoid the potential for future disputes – and advisers have a crucial role to play in putting in place measures from the outset that can reduce that risk.

At the heart of this is good governance. Advisers with a focus on nurturing close, positive relationships with their clients are best placed to deliver on that. By understanding their clients, bringing all stakeholders to the table, advisers can establish clearly what a family’s fundamental values are and what its shared vision is.

Is there, for example, a mismatch between what a family says its core values are, and what is reflected through its existing portfolio allocation and the luxury assets within it? Does it ‘fit’?

Equally, deep conversations with an adviser can reveal whether there is a concentration risk when it comes to luxury assets, which often have high or fluctuating valuations. One piece of art can significantly shift in value, up or down, for instance, and make a considerable impact on the total wealth valuation – which in turn could impact its risk profile. An adviser can in this instance guide a family as to whether there is a need to think about diversifying to meet its overall wealth objectives.

Indeed, when it comes to luxury assets, families should see it as an opportunity to make sure they have robust, independent, good quality legal and advisory frameworks in place to avoid current and future intergenerational disputes.

All this can subsequently be documented through the family charter, investment strategy, letters of wishes and other documentation, providing a clear framework that should help guide them in an area that is so easily impacted by individual sentimental and emotional preferences.

Practicalities

Balancing the growth, purpose and legacy objectives can be a tricky task but, with a foundation of good governance and sound documentation, there is still undoubtedly a place for luxury assets within a wider portfolio.

There are some practicalities, though, that can help ensure such assets are properly managed and structured.

First and foremost, luxury assets frequently require specialist expertise if they are to be managed effectively. That might mean, for instance, getting specialist insurance advice where family art may be moved across borders, or drawing on yacht management services to administer crew and ensure adequate marine insurance is in place. Bringing in the right expertise early can dramatically reduce risk in the long run.

Taking a view on a family’s structures and whether they offer enough, or too much, flexibility in terms of holding assets is another practical point that should be addressed.

Luxury assets are often acquired to be enjoyed by a family – art, jewellery, or vintage cars for example. Others, such as fine wine or whisky, may form part of a collection. Whatever the approach, choosing the right structure is an important factor in achieving the desired and proportionate flexibility – protecting the assets while allowing a family to enjoy those assets too.

Ownership is a key question too when it comes to structuring luxury assets – regrettably there can be instances where question marks over ownership of an asset can lead to inter-family disputes. The case of Robert Tibbles, a collector of contemporary art, and one of his pieces of artwork, a Damien Hirst painting entitled ‘Beautiful tropical, jungle painting (with pink snot)’, is a case in point. Robert’s father, Nigel, and twin brother, Sebastian, sued him over ownership of the piece when it was sold, leading to an unfortunate and bitter family dispute – clear structuring played a key part in resolving that case.

In addition, if structured appropriately, it may well be possible for non-income generating luxury assets such as art to be used as leverage to generate capital liquidity – thereby meeting the needs of both the wealth creator and the nextgen, without directly impacting the asset itself.

Evolution

As families look to a new era of investment, shaped by the need to balance their own growth ambitions with the desire for purpose-driven investment and a need to integrate the values of the nextgen, advisers have a responsibility to ensure luxury assets are managed and structured appropriately as part of a family’s holistic wealth management strategy.

Really understanding the needs and ambitions of a family as a whole by cultivating a close relationship with them is critical in establishing a robust governance framework that can cater for the appetite to hold luxury assets on the one hand with the need to generate returns on the other. By taking a number of practical steps -from establishing good oversight models and structuring to seeking specialist expertise where needed – luxury assets can continue to provide both the family enjoyment and legacy they promise, and play a role as part of a wider investment portfolio.

This article was published in ALM’s The Month – Luxury Assets Magazine – May 2023

The indications are that wealthy families continue to hold some form of luxury asset within their investment portfolios. Such assets make up some 5% of investable wealth on average – that’s the same proportion as gold and crypto assets combined (Knight Frank Wealth Report 2023).

And possibly with good reason – the latest Knight Frank Luxury Investment Index rose by a healthy 16% during 2022, beating inflation and outperforming most mainstream investment classes. Art was the top performer, growing by 29%, according to the Index, with classic cars rising 25%.

There is, however, some differential within the sector – wine grew 10% (down from 16% the previous year), while whisky was up just 3%.

Often for families, returns when it comes to luxury assts are not necessarily the be all and end all – they are ultimately investments of passion, sentiment, interest and lifestyle. Yachts and private planes, for instance, may meet the lifestyle requirements of a family, but they are notoriously expensive assets to hold, depreciating in value and delivering very little, if any, income return.

But when do non-income generating luxury assets become a problem for the family strategy more widely – particularly with total UHNWI wealth having been eroded by some 10% last year against challenging and high inflation versus previous years market conditions (Knight Frank), and with the nextgen continuing to take more of an interest in driving family portfolios?

Fresh Look

With almost a third of wealthy private investors targeting capital growth this year (Knight Frank), the role of luxury assets within a portfolio may well become part of the conversations between advisers and their clients in the coming months, as they take a fresh look at how hard their investments are working and how they could be put to work harder to generate returns.

Crucial in this scenario is looking at where luxury assets sit within the wider portfolio and the family’s wealth strategy holistically. Often, of course, family wealth creators are emotionally tied to their luxury assets and may well consider them to be part of their family legacy. At the same time, though, those assets may well be at odds with the shifting priorities and values of the increasingly influential nextgen.

In any situation, of course, a family will want to avoid the potential for future disputes – and advisers have a crucial role to play in putting in place measures from the outset that can reduce that risk.

At the heart of this is good governance. Advisers with a focus on nurturing close, positive relationships with their clients are best placed to deliver on that. By understanding their clients, bringing all stakeholders to the table, advisers can establish clearly what a family’s fundamental values are and what its shared vision is.

Is there, for example, a mismatch between what a family says its core values are, and what is reflected through its existing portfolio allocation and the luxury assets within it? Does it ‘fit’?

Equally, deep conversations with an adviser can reveal whether there is a concentration risk when it comes to luxury assets, which often have high or fluctuating valuations. One piece of art can significantly shift in value, up or down, for instance, and make a considerable impact on the total wealth valuation – which in turn could impact its risk profile. An adviser can in this instance guide a family as to whether there is a need to think about diversifying to meet its overall wealth objectives.

Indeed, when it comes to luxury assets, families should see it as an opportunity to make sure they have robust, independent, good quality legal and advisory frameworks in place to avoid current and future intergenerational disputes.

All this can subsequently be documented through the family charter, investment strategy, letters of wishes and other documentation, providing a clear framework that should help guide them in an area that is so easily impacted by individual sentimental and emotional preferences.

Practicalities

Balancing the growth, purpose and legacy objectives can be a tricky task but, with a foundation of good governance and sound documentation, there is still undoubtedly a place for luxury assets within a wider portfolio.

There are some practicalities, though, that can help ensure such assets are properly managed and structured.

First and foremost, luxury assets frequently require specialist expertise if they are to be managed effectively. That might mean, for instance, getting specialist insurance advice where family art may be moved across borders, or drawing on yacht management services to administer crew and ensure adequate marine insurance is in place. Bringing in the right expertise early can dramatically reduce risk in the long run.

Taking a view on a family’s structures and whether they offer enough, or too much, flexibility in terms of holding assets is another practical point that should be addressed.

Luxury assets are often acquired to be enjoyed by a family – art, jewellery, or vintage cars for example. Others, such as fine wine or whisky, may form part of a collection. Whatever the approach, choosing the right structure is an important factor in achieving the desired and proportionate flexibility – protecting the assets while allowing a family to enjoy those assets too.

Ownership is a key question too when it comes to structuring luxury assets – regrettably there can be instances where question marks over ownership of an asset can lead to inter-family disputes. The case of Robert Tibbles, a collector of contemporary art, and one of his pieces of artwork, a Damien Hirst painting entitled ‘Beautiful tropical, jungle painting (with pink snot)’, is a case in point. Robert’s father, Nigel, and twin brother, Sebastian, sued him over ownership of the piece when it was sold, leading to an unfortunate and bitter family dispute – clear structuring played a key part in resolving that case.

In addition, if structured appropriately, it may well be possible for non-income generating luxury assets such as art to be used as leverage to generate capital liquidity – thereby meeting the needs of both the wealth creator and the nextgen, without directly impacting the asset itself.

Evolution

As families look to a new era of investment, shaped by the need to balance their own growth ambitions with the desire for purpose-driven investment and a need to integrate the values of the nextgen, advisers have a responsibility to ensure luxury assets are managed and structured appropriately as part of a family’s holistic wealth management strategy.

Really understanding the needs and ambitions of a family as a whole by cultivating a close relationship with them is critical in establishing a robust governance framework that can cater for the appetite to hold luxury assets on the one hand with the need to generate returns on the other. By taking a number of practical steps -from establishing good oversight models and structuring to seeking specialist expertise where needed – luxury assets can continue to provide both the family enjoyment and legacy they promise, and play a role as part of a wider investment portfolio.