NEW YORK – For some sophisticated investors, adding a blue-chip name to the portfolio means purchasing an oil painting by Jasper Johns or a silk screen by Andy Warhol.
Recognizing a growing interest in the art world, major banks have gone beyond offering money management and estate planning to advising wealthy clients on collecting art.
Last month, ABN Amro Holding NV became the latest player in an already-crowded field, creating an art advisory group for high-net-worth clients looking for alternative investments. Within banks, the art divisions are usually tiny boutiques staffed with professionals who know how to manage collections, work with appraisers and bid at auctions.
“Art is a very tricky and nuanced investment,” says Mary Hoeveler, a former Christie’s executive who now heads Citigroup Inc.’s Art Advisory Service. “It’s not for the unschooled who really don’t understand the market or what they’re buying.”
People are searching out second or third opinions before they invest millions of dollars in a Roy Lichtenstein or Jackson Pollock. Turning to private bankers for advice makes sense; after all, “it’s an expensive proposition, collecting art,” Hoeveler says. “It’s certainly a rich man’s sport.”
Take, for example, the sale of Picasso’s “Boy With A Pipe” that sold at an auction in May for a record $104 million.
J.P. Morgan Chase &Co.’s art advisers had accompanied a client to the auction to provide some guidance into a world where bids are made by paddles or, more mysteriously, relayed by an anonymous collector over a telephone.
When the winning bid came down, the client “turned to our advisers and said, ‘That’s intimidating – I can’t believe something could go for $104 million,’” says Michael Duffy, a wealth adviser with J.P. Morgan Private Bank. “You really have to think twice and hard about what you’re doing and what you’re buying.”
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