This process could apply to any collectible investment – it would seem wise to see the investment in person before handing over any money.
Calculating costs
Another aspect of these passion investments is not just the initial cost of purchasing them, but also the ongoing charges associated with such specialist and often precious items.
These costs apply especially to wine, where often quite specialist storage needs to be paid for, and vintage cars, which also come with storage issues of their own and the ongoing costs of repairs and maintenance.
Ms Best suggests: “Particular attention also needs to be paid to arrangements for transporting and storing the physical asset and that proper, often specialist insurance is in place.”
Mr Ritchie says: “When you’ve paid the price for your wine do you have any shipping costs? Do you have any insurance costs? Do you have any storage costs? What are your annual costs for keeping that wine?
“If you’re using professional storage, you’re insuring the wine. You want to take those costs into account as well as any sellers’ fees on the other end of it.”
Ms Walsh recalls a client of hers sold some works by street artist Banksy at Sotheby’s which charged commission at 35 per cent.
Adviser views
Individual advisers will feel differently about discussing these types of investments with clients.
Darren Cooke, chartered financial planner at Red Circle Financial Planning, voices his concerns about the lack of regulation and abuse by scammers in the past.
He says: “I would not advise a client to invest in any such areas as I think you need specialist knowledge of that area.
“If a client knew enough and wanted to invest that is up to them. I have one client who trades in antique clocks but he has been doing that for nearly 40 years.”
Earlier this year, charity Independent Age produced a checklist for advisers to give to any clients they believe might be vulnerable.
It suggests it could be a scam if the communication is unprofessional or the client is being asked to hand over money upfront.
Claire Walsh, chartered financial planner at Aspect 8, has a slightly different view of collectible investments.
She admits: “When it comes to buying collectibles, clients often assume my advice is going to be po-faced and to keep all their money in investment funds but my ethos is very much about enjoying your wealth and, where people can afford it, I encourage them to spend their money, whether that is on luxury holidays or buying the classic car, or adding to their antique collection.”
