Alt Investments

EXCLUSIVE INTERVIEW: Building Client Relationships With A Bit Of Art

Tom Burroughes Group Editor 25 February 2013

EXCLUSIVE INTERVIEW: Building Client Relationships With A Bit Of Art

There are few areas of wealth management where the conversation is as personal and revealing as an individual’s artwork choices. And the business of advising wealthy individuals on collections is an important service offering for some banks.

Does a Picasso float your boat if you have deep enough pockets to afford one of his pictures? Do you prefer a Dutch Old Master or the latest shocker from Damien Hirst?

There are few areas of private client management where the conversation is as personal and revealing as an individual’s artwork choices. And the business of advising high net worth individuals on collections and acquisitions continues to be an important service offering for some banks.

Over atCiti Private Bank, which has been in the art advisory business since the late 1970s, the firm argues that guiding clients through the maze of the art world is a task that gives a firm an unrivalled opportunity to see what makes a client tick. This is also very useful for when a bank wants to find out about a client’s broader investment tolerances and appetites.

Despite concerns about whether the pace of art price growth is sustainable - this market saw a big correction in the early 1990s - the burgeoning wealth of regions such as Asia, and the appeal of art for its “hard asset” qualities amid economic jitters, keeps the market in robust shape, Suzanne Gyorgy, global head, art advisory service, Citi Private Bank, told this publication in a recent interview.

“The amount of press and attention on art as an asset class has exploded,” she said.

That rise in attention does not automatically denote a one-way price trend, however. According to the Mei Moses World All Art Index, a barometer of art auction prices produced by the wonderfully-named Beautiful Asset Advisors in the US, the index showed a year-to-date dip in December 2012 of 3.28 per cent, and lagged broad equity market indices last year. (The MSCI World Index of developed countries’ shares logged total returns of more than 15.8 per cent in 2012.) However, in 2011, the Mei Moses All Art Index rose by 10.2 per cent.

Citi is not the only private bank and private client business that advises on art, although this US bank is one of the most long-established in a specialist field. Other firms that provide art advisory (not all firms are strictly comparable) include Emirates NBD (it announced a move into the area two years ago); Societe Generale; Withers, the law firm; Deutsche Bank (which boasts a substantial art collection of its own); Butterfield Private Bank and BSI Bank. Meanwhile, there are a cluster of art advisory boutiques and specialist firms working in this area. Randall Willette, an experienced figure in this field, heads Fine Art Wealth Management, for example, and is a member of sister publication WealthBriefing's editorial advisory board. The advisory field covers a wide range of issues; as Willette recently wrote here, it includes topics such as family governance.

Rising interest

As recounted regularly by this publication, interest in art as an asset class has developed for different reasons in recent years; even during the depths of the 2008 credit crunch crisis, the market did not suffer unduly, Gyorgy said. However, she also noted that after some initial hectic price activity, there are signs of growing maturity in markets such as Asia, which she sees as a welcome development.

“In the Asian market, auction activity has slowed, which, I think that is a positive thing as they [Asians] are moving from a trading mentality to a more discerning, connoisseur mentality,” she said. “Even though some art [turnover] volumes have dropped, there is a base for building a stronger market and one not as frothy as in the past,” she said.

The impact of buyers from Asia, among other regions, on established art markets in the West continues to generate attention. At Sotheby's evening sale of Impressionist and modern art in early February, an Asian reportedly won the house's most-expensive artwork, Picasso's $45 million Woman Sitting Near a Window. (Source: Wall Street Journal.)

All the fun of the fair

Gyorgy spoke ahead of the Art13 London art fair event, running from 1 to 3 March, of which Citi Private Bank is the sponsor. As part of the event – and announced this week – there is an invitation-only “private museum summit,” bringing together collectors and other “tastemakers” from the West and East. Citi says the art fair will be the biggest to launch in London for a decade.

At the Art13 London event, Asian, North American, South American and European private museum owners will gather, with the idea of building a network among such institutions. The “summit” happens a few days before the main art fair, on February 28, chaired by Philip Dodd, the broadcaster and chair of the Art13 London international advisory board. The closed-door event features more than 30 participants.

This sort of international event excites Gyorgy, who says Citi Private Bank’s clients will revel in the opportunity to meet experts in this field.

Art fairs, as well as being enjoyable feasts of great art, taking place in many cities, are tremendous networking opportunities – a point not lost on the likes of Citi Private Bank.


One feature that Gyorgy notes is that the bank sometimes will find itself handling the affairs of more than one generation in a family where art collection is an issue.

“In the case of some clients that we are working with, now it is that we are working with their children,” she said.

So what do people like?

In the US and Europe, there has been a strong demand for post-1945 art works, she said. “A lot of people are collecting that,” she said, referring to the Baby Boomer generation. “With the wealth that has been created, this will continue,” she said.

“There is [also] more contemporary art out there being made and that is always going to interest people,” she said, referring to entrepreneurs looking for “dynamic” artforms that reflect their values.

At Citi, its art unit comprises two main elements: art finance (the use of art as collateral to finance other art purchases or for other purposes), and art advisory, (collecting, storage, logistics, due diligence checks and provenance).

One thing is certain. Even though art may not always perform as strongly as an asset class as, say, the S&P 500 or a high-octane hedge fund, the products are a lot more interesting to look at.

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