Over the next decade, therefore, expect to see individuals and their families acquiring and holding treasures, both as flight capital in places of turmoil, and as a hedge against inflation in places of relative security such as the US. These treasures will be specific, tangible assets owned directly by individuals, and taxable to the owners. Much of the current financial and investment planning, which is based on the rational analysis of risk/benefit returns of a portfolio of liquid and intangible assets held by institutional nontaxable investors, will be useless. This is because planning for individual taxable investors in tangible investments is quite different from the planning for institutional nontaxable investors in liquid intangible assets.
Planning for treasure owners is different for several reasons. First, in addition to the obvious investment purpose, ownership of unique treasures can offer personal enjoyment and appreciation of heritage and culture. Indeed, these benefits can become the primary motivators or individuals as their occasional purchase develops into a collection.
Second, once acquired, individuals are often very reluctant to part with their unique assets, even when prices rise excessively from a rational investment perspective.
Third, the goal of each individual is wholly dependent on the unique personality of the individual, which evolves over time. What at first may have been a purchase purely for decorative or investment diversity purposes, over time could evolve into a collection that has great personal significance. Success for these collector clients becomes outcome driven, not results driven.
Individual owners of treasures need more than just investment and financial planning: they need specialized guidance in building an object-oriented strategic plan. This must “overlay” their other planning to work at a high level of comprehensiveness and outcome oriented processes, while integrating into their investment, financial and legal processes.
A high level of government debt creates a different and challenging environment for investors. Historically, to resolve such debt, governments monetize debts and debase currencies, and that eventually leads to hyperinflation and collapse of currencies and bond markets. More individual taxable investors recognize this risk and are investing more of their wealth in treasures – tangible assets, such as art, gems, coins and other flight capital – even here in the US.
Ownership of treasures, however, is complicated by the emotional enjoyment and cultural significance of the treasure to investors. Traditional financial, legal and investment planning is not up to the task of handing the acquisition and ownership of treasure, so an overlay of specialized planning best serves collectors of treasures.