This is the second part of a feature looking at the issues facing art investors in an increasingly international market.

This the second part of a feature about the issues of art and managing collections across borders. To see the first part of the feature, click here. The authors are Randall Willette, managing director, Fine Art Wealth Management, and Tim Sutton, managing director, Constantine Limited. To view the first part of the feature, see here.

Best practice in art logistics
Risks of damage to art from packing, shipping, storage and installation can arise not just in one country but in a number of different countries and sophisticated collectors require bespoke art logistical services tailored to their international lifestyles. Given that each collection is unique and irreplaceable, professional art handling is critical to protect from loss, damage or theft. Based on claims statistics from AIG Private Client Group over 50 per cent of the two hundred most expensive art claims paid to their private collector clients were a result of accidental damage including those incurred during transit.

Private collectors should embrace the same best practice in art logistics found in the collection management policies of major museums. The Guggenheim Foundation, for example, requires that the museum to maintain safe and appropriate facilities for the storage and transport of the collection, with proper environmental controls to maintain internationally accepted temperature and humidity standards, fire prevention, and security measures, all of which are designed to maintain professional standards for the storage of art. The Foundation’s collection management policy is there to ensure that the collection and all works of art in its custody are secure and they maintain a plan for disasters and emergencies for the Solomon R. Guggenheim Museum, Peggy Guggenheim Collection, and each storage facility. All Foundation security personnel must be trained in accordance with applicable professional standards to respond to threats of theft, fire, or other danger to the Collection and other works of art in the custody of the Foundation.

At the V&A Museum in London it is the responsibility of the Registrar to ensure that all safeguards have been taken to minimize risks for objects in transit between Museum sites and external organisations. All objects must be handled and moved by staff who are trained and competent to do so. Where objects are handled by non-Museum staff, the Registrar will ensure that the standard of care meets minimum agreed standards. All object movements are assessed to ensure that the correct arrangements and resources are present, so as to minimise the risk to the object and the structure of the building is checked prior to the movement of any heavy load.

All transport arrangements must be appropriate to the nature of the object, its value and fragility, and the possible risks involved in the journey. Objects are packed or protected by staff who are trained and competent to do so. Where objects are packed by non-Museum staff, the Registrar will ensure that the standard of care is equal to their own.

Valuable collections are most at risk when they are being shipped. Collectors with high value works of art should engage only reputable companies that specialise in transporting valuable works supplemented by an international network of trusted fine art shipping companies. With private art collections becoming a greater part of overall personal wealth, sophisticated collectors would be prudent to ask a few key questions of their art transport company to ensure they meet the following standards of best practice.

Standards of best practice used for high value works of art:

- Any transport company used to move objects must have experience in the transport of fragile and valuable artefacts with employees trained in the handling of such material.

- When objects are sent out or brought in from overseas, the transport company must have the ability and appropriate experience in dealing with airport and seaport procedures and all necessary documentation.

- The removal, packing, unpacking and transport of the loan material should be supervised by senior members of the transport company in consultation with the art owner.

- All vehicles used by the transport company should be equipped with good quality locking devices and provide appropriate protection against vibration and shock and extremes in relative humidity and temperature conditions.

- Vehicles used should normally be closed vans and equipped with equipped with good quality locking devices.

- All vehicles and crew should be equipped with appropriate means of communications such as fixed and/or mobile radio telephones for route monitoring and emergencies.

- All vehicles must be provided with fire-fighting equipment appropriate to the load and the crew experienced in its use.

- The transport company should ensure a vehicle carries two drivers on long journeys.

- The crew must consist of responsible persons experienced in the handling of valuable consignments and capable of dealing effectively with an emergency situation.

- The route should be carefully planned and the addresses and telephone numbers of emergency services should be carried by the crews and accompanying couriers.

- Ideally, the journey should be completed in one haul.

- When a stopover is necessary arrangements must be made to lodge the vehicle and/or material in secure premises which are protected by a 24-hour intruder and fire alarm system or under continuous supervision.

- On no account should a vehicle be left unattended by the crew, even in an emergency.

- Special circumstances may apply to some overseas transport, but arrangements must be no less rigorous than those specified above.

- An effective 'no-smoking' policy should apply in respect of areas containing works of art.

Moving art into private homes & residential settings
Many wealthy individuals initially start buying art to decorate their homes and fill wall space however their collecting soon becomes a passion. For many collecting families, they simply want their art works to be seen and in recent years a growing number are choosing to build and design their private residences to exhibit their art.

Works of art are displayed in combination with museum scaled residential settings juxtaposing paintings and installations with the house's living spaces and domestic furniture. The family living areas flow around the museum spaces to accommodate artworks intermixed with the domestic settings of the house. Equally important, an increasing number of sophisticated collectors are challenging conventional perceptions of public and private and exploring new relationships between art and architecture.

According to the Knight Frank 2014 Wealth Report, just over a fifth of UHNW individuals, on average, are considering buying a new home in 2014, although the figure rises to almost a third of UHNW individuals living in Russia and the CIS. Globally, the UK is considered the number one destination for those seeking a new domicile, although the US is still more popular with Asian UHNW individuals. It is no surprise the continued global wealth creation, particularly in emerging markets, has been a key driver for prime property markets in the same way it has for art.

This trend looks set to continue with a forecast increase of 28 per cent in the total number of UHNW individuals around the world by 2023. Shifts in wealth distribution contributed to changing fortunes in the Knight Frank Global Cities Survey, which measures the most important cities to the world’s UHNW individuals community. While London retains its top spot in 2014, New York looks set to overtake by 2024.

Setting up private museums and foundations.
Today, the private collections of ultra-high net worth families can rival those of major art institutions. Wealthy collectors are moving toward an increased focus on using their art collections to realise what they define as a richer life and to achieve a greater sense of fulfillment for themselves and for their community.

There is a long linage of private art collections in residential settings including Sir John Soane’s Museum in London, New York’s Frick Collection, the Peggy Guggenheim Collection in Venice and Melbourne’s Heide Museum of Modern Art. In recent years a growing number of wealthy collectors are choosing to build their own museums, through a foundation rather than donate works directly to existing
institutions.
While there are a number of factors driving the growth of private museums globally, a lack of public exhibition space has played a major part. For many collecting families, they simply want their art works to be seen. Though still relatively rare, private museums opened by wealthy collectors are increasing in both number and size globally. Ultimately, collectors considering the creation of a foundation feel a responsibility towards their art and want it cared for and preserved.

It is only natural that serious collectors who devote such care to cultivating their art collection become permanently attached to them. As they actively make decisions and choices that shape their collections, they continually assess how best to care for and preserve the results of their efforts. Eventually, and for many the question comes relatively early, they are faced with what to do with their collection when they are no longer able to maintain it.

Some collectors decide to either transition their collections into museums, continuing to play a key role in their development, or donate them so that they can enjoy them displayed at other institutions. However, even if the decision is not made until their death, great collectors care deeply for their collections and are interested in ensuring them a sound future.

Conclusions
The future looks bright for private collectors both in the expansion of their own private collections and having their artworks exhibited at public institutions globally. Armed with their private collections as their core and a mission of civic responsibility, a new generation of wealth is infusing the arts field with new ideas to promote creative expression.

However, as private collectors seek out new opportunities to engage wider audiences moving their artworks across borders will become increasingly challenging. Museum standards are likely to impact private collections more directly and we will see more collectors seeking advice from professionals resulting in collections better prepared to survive after their creators are gone in order to preserve and protect them for future generations.