People often buy art or collect other objects because they are pleasing to the eye, or they enjoy the process of seeking out a rare piece or discovering an emerging artist early.
But a benefit that is often overlooked is that these items — whether it’s artwork by one of the greats or a collection of vintage cars — can be valuable financial assets and play a key role in wealth planning, philanthropy, or succession strategies.
They can be referred to as “passion assets,” says Robyn McCallum, Director, Fine Art and Collectibles, Scotia Wealth Management. “These items have deep value, and not just financial value — cultural value, emotional value, they’re often tied to identity, memory, and legacy.”
Scotiabank’s new Fine Art & Collectibles service officially launched in late October but soft launched in March. The program aims to help clients manage these assets, including assistance with valuation, acquisition, sales, tax and estate planning considerations, and philanthropic strategies.
“It was a natural evolution to begin offering this specialized service to clients who have meaningful collectibles, to both help manage and integrate them into their financial and estate planning,” said Erin Griffiths, Executive Vice President, Global Wealth Solutions, Scotia Wealth Management. “These conversations, as part of a broader wealth management discussion, are a valuable addition for clients.”
From a financial perspective, art and collectibles can be an investment that holds or increases its value or can be used as collateral for a secured loan.
Art-secured lending allows clients to access liquidity by using their collection as collateral without needing to sell any of the items or pieces.
“We’ve had clients who were able to finance a business expansion by leveraging their collection without divesting,” says Griffiths. “This lending solution provided them financial flexibility while continuing to own these assets that are so important and meaningful to them.”
These items have deep value, and not just financial value — cultural value, emotional value, they’re often tied to identity, memory, and legacy.
These assets should also be considered in estate planning to ensure they will be properly cared for, transferred, or donated in alignment with the collector’s wishes. Collectors can spend a significant amount of time building a collection that reflects what matters to them and it’s important that they are accounted for responsibly.
The approach and valuation vary depending on the type of collectible, but these items tend to hold their value over time. Recent examples include notable auction results: Frida Kahlo’s El sueño (La cama) selling for $54.7-million USD at Sotheby’s London, and a rare 1977 Topps Star Wars trading card featuring Luke Skywalker selling for a record $268,400 USD.
Even very sophisticated collectors can find the market difficult to navigate. The role of Scotia Wealth Management is to help clients understand, manage, and strategically integrate these assets into their broader financial planning.
One client example that demonstrates the complexity that can arise involved a couple that inherited a valuable painting by a prominent Canadian artist and loaned it to a major cultural institution in Ontario, long-term. When the husband passed, his wife wanted to donate the artwork, but the institution declined the gift as its collection already contained many of the artist’s work. Still, the client wanted the gallery to benefit from the piece, even if just monetarily, but the institution’s rules prohibited it from selling donated items.
So, Scotia Wealth Management facilitated a solution through the Aqueduct Foundation, one of Canada’s largest registered charities (operated by ScotiaTrust) whose mission is to facilitate personal philanthropy.
“Through the foundation the charity will be able to sell the piece at auction later this month, and the proceeds can then be donated to the gallery,” said Malcolm Burrows, Executive Director and founder of Aqueduct and Head of Philanthropic Advisory Services at Scotia Global Wealth Management.
“We figured out a way to fulfill the wishes of our donor, which was to benefit an institution that they care about.”
Other cases are more straightforward, such as a secured loan that used classic cars as collateral, or helping with international transport.
McCallum believes every collection tells a story. “We aim to understand what matters to the client – financially, culturally, personally – and shape a plan that respects that.”
