Art and wine sit at the point where wealth meets identity. They are bought for love, displayed with pride and often discussed as if they were investments. Howard Bilton, who collects art, runs the Sovereign Art Foundation's prizes and owns a vineyard in Portugal, offers a refreshingly unsentimental account of both on Wealth Office. His view is that most of these assets reward the owner in pleasure, rarely in money, and that this is perfectly acceptable when understood from the start.

A soft market and a narrow top

Bilton describes the art market as soft, which he says makes it a good time to buy and a poor time to sell. He sees the same pattern across other luxury goods. Fine wine, in his experience, now sells at a much reduced price compared with five years ago.

His more structural point concerns resale. He estimates that around 95% of art, and possibly more, has no secondary market at all. Commission is part of the reason. A work bought through a gallery typically carries a 50% gallery share, so in Bilton's reckoning the piece is worth half of what was paid on the day of purchase, and it needs to appreciate substantially before the owner is ahead. Most never do.

The market structure compounds the problem. Auction houses, he notes, generally take only work that already has an auction record, which leaves newer artists in a catch-22. Galleries are polarising, with large groups operating showrooms in multiple cities while smaller galleries close or move online. Top-tier fairs favour galleries with established premises and artists already of interest to buyers. Blue-chip names continue to command very high prices, and Bilton describes a pyramid in which the top is forging ahead and the rest is struggling.

Collecting for pleasure, with a threshold

Given that picture, Bilton is clear about his own motive.

It's definitely pleasure. It's a way of using your money because money in the bank is actually of no use whatsoever, is it?

— Howard Bilton, Wealth Office

He describes his approach as scattergun. He buys student work from the foundation's prizes, art from graduates and anything else he loves. He does, however, apply a threshold. Below a certain price, which he now puts at about 20,000, he buys purely on taste. Above it, he looks for residual investment value, and in his view that only exists if there is an auction record supporting the price. Where there is none, he would rather find another piece that gives as much pleasure at a lower cost.

That discipline is a useful frame for principals. It separates two decisions that are often blurred together: buying for enjoyment and buying for value. Bilton's practice is to be honest about which one is being made.

The vineyard as a trophy

Bilton applies the same candour to wine. He notes that many Bordeaux châteaux have changed hands, often to buyers from the Far East, and that he has seen similar interest in Portugal.

It is a trophy asset, and with very few exceptions, it's not going to be an investment at all. It's going to be an investment in your happiness and your general joie de vivre, because it is a lovely business to be in, but it is not lucrative.

— Howard Bilton, Wealth Office

He admits he once believed he could prove the sceptics wrong, and suspects every entrepreneur who buys a vineyard thinks the same. He repeats the old line that the way to make a small fortune in wine is to start with a large one.

Where passion assets earn their keep

Yet Bilton's vineyard illustrates a less obvious return. It has become a family business. He had no ambition to bring his children into the Sovereign Group, wary that promotion by relationship would be divisive and unfair to other staff. His eldest son, Tom, took an arts degree and showed no interest in the firm. When Tom pitched to run the wine business, the project took on a new seriousness. Bilton now intends to ensure the vineyard can pay his son a living before he exits, and sees farming as a natural family enterprise and a good way to hand over wealth by making the recipient work for it.

The vineyard also feeds the foundation. When it was set up, Bilton pledged 20% of profit to the charity. Every bottle carries a label designed by children the foundation has taught or by artists who have helped it. He jokes that the winery reported a profit of €400 last year, and suspects that if the wine and sales proceeds directed to the foundation were added back, it would show a profit. Each part of his world, he says, supports the others.

The lesson for families is twofold. Art and wine are best approached with clear eyes about resale value and market structure. And a passion asset, held without illusions about returns, can still do serious work: as a training ground for the next generation, as a shared family project and as a channel for philanthropy.