It's hard to conceive of a dark side to giving holiday gifts to friends and loved ones. But unusual risks associated with three popular types of gifts could make normally happy moments turn sad. For thoughtful financial advisors, therefore, alerting clients to these risks not only can serve as a valuable and attention-getting touchpoint communication at this time of year, it also demonstrates your value as a source of practical advice. Specifically, giving art, jewelry and toys carry unexpected risks.
(Related: Top 10 Ridiculous Luxury Christmas Gifts)
A Gift of Art
With artwork, it's true that the majority of successful clients won't be buying museum-quality, million-dollar paintings or sculptures. Nevertheless, many clients can easily spend thousands and even hundreds of thousands of dollars on a gift of art, often without much planning for its purchase or how to transport or display it afterwards. Here are some risks associated with buying a gift of art:
Fraud. Sometimes, what you see and buy isn't really what you get. Art experts say it's important to always buy art from reputable dealers, whether online or at a bricks-and-mortar location. Have the dealer provide a thorough report on the provenance, or ownership history, of the piece and make sure ownership title is clear.
Transportation. Art can be easily damaged or stolen in shipping. Clients shouldn't take art home in a cab, which exposes it to theft and damage, or have it sent by general shippers, who don't have expertise in this area. Make sure clients use specialized art transportation companies, which will pack and ship the art carefully.
Display. Clients often place artwork where it receives maximum visibility, but where it may be susceptible to damage from heat, humidity, dirt or vibration. They should work with experts who know where and how to mount and display fine art.
Keeping inadequate records. It's important that clients keep a full description and a photo of their artwork in a safe place, preferably with copies offsite. This is invaluable for insurance purposes if the piece is lost, stolen or damaged.
All That Glitters
