Home Radio Segments Guest Segments Everything You Need To Know Before Your First Big Art Investment: Part...

Everything You Need To Know Before Your First Big Art Investment: Part I

Lisa Schiff, Art Investment

With Lisa Schiff, President and Senior Advisor at Schiff Fine Art Advisory

Art Basel

Art Basel kicks off its 16th edition in Miami Beach from December 7 – 10, 2017.  Art Basel stages annual art fairs in Switzerland, Hong Kong, and Miami Beach where it’s a big cultural event and gives the art world a glimpse into the latest frontiers of art from budding and established artists.

Lisa Schiff

To get a better handle on the somewhat disjointed and confusing market of art, Steve speaks with Lisa Schiff, President and Senior Advisor at Schiff Fine Art Advisory, a leading international art advisory firm.  Lisa helps build art collections for private individuals and foundations and curates exhibitions for one of her more famous clients, the Leonardo DiCaprio Foundation.

Steve’s interest in the arts, aside from art for the sake of art, stems from its value as an alternative investment in retirement portfolios and the ambiguity of its pricing and intrinsic value.  In a prior segment, Why Investing In Art Is Like Playing For The NBA, Steve spoke about the opportunities and challenges of investing in this arena.

The Role Of An Art Advisor

As an art advisor, Lisa Schiff attempts to make the opaque world of art collecting as transparent as possible by educating collectors and empowering them to have confidence in buying what they like.

Steve wonders how she goes about valuing something so subjective that depends on personal taste and the broader art market’s intangible view of what a piece of art if really worth.  In Lisa’s view, art pricing isn’t vague, but rather the well-defined consensus of multiple factors that determine its value.  She helps clients find the best of the type of art they gravitate toward.

The Ecosystem Of Art Galleries, Art Dealers, And Art Advisors

Art advisors form part of an ecosystem that includes galleries, dealers, and advisors.  Think of art galleries as content aggregators that provide physical venues to showcase a stable of artists they want to promote within the art world.  It’s a difficult role to play, and Lisa Schiff believes it’s very hard to be a successful gallery.

Art dealers are traders who buy and sell art; art advisors give buyers and sellers advice on what to buy and sell, for how much, the provenance of the piece, and the artist’s perceived value.  While many in the industry wear all three hats, Lisa focuses on art dealing and advisory, and her clients are collectors, not galleries or artists.

Art Advisor Akin To Fee-Only Investment Advisor

Steve likens her advisory role to his as a fee-only provider of financial and investment advice, where both have no hidden interests and are paid purely for unbiased advice that is in the client’s best interest.

Lisa sees the parallels and likens them to her not wanting to get too cozy with the galleries that want to promote certain artists, while still maintaining good relationships with them—akin to financial firms wanting to push their products in Steve’s world!

The Eye-Popping $450 Million Leonardo da Vinci Sale

Steve turns his attention to a notable art event in November 2017, the $450.3 million sale of a Leonardo da Vinci painting of Jesus Christ.  This painting was discovered at an estate sale and bought for $10,000, and the buyer spent ten years establishing its authenticity before selling it for $200 million.  Even so, some question its authenticity as a true da Vinci, and say it may have been painted by one of his students.

While Lisa Schiff does not doubt the painting’s authenticity one bit, she’s indifferent to its provenance because it’s a rare, iconic frontal image of Jesus Christ that drew huge crowds, and its uniqueness justifies its $450 million value in her mind.

Steve continues his conversation with Lisa Schiff in the next segment.  Click here for Part II.

Disclosure: The opinions expressed are those of the interviewee and not necessarily United Capital.  Interviewee is not a representative of United Capital. Investing involves risk and investors should carefully consider their own investment objectives and never rely on any single chart, graph or marketing piece to make decisions.  Content provided is intended for informational purposes only, is not a recommendation to buy or sell any securities, and should not be considered tax, legal, investment advice. Please contact your tax, legal, financial professional with questions about your specific needs and circumstances.  The information contained herein was obtained from sources believed to be reliable, however their accuracy and completeness cannot be guaranteed. All data are driven from publicly available information and has not been independently verified by United Capital.

< class="collapseomatic tsps-button" id="id664abad086ce3" tabindex="0" title="Read The Entire Transcript Here" >Read The Entire Transcript Here< id='swap-id664abad086ce3' class='colomat-swap' style='display:none;'>Collapse Transcript

Steve Pomeranz: This week kicks off the 16th edition of Art Basel in Miami Beach. Art Basel is a very popular venue. It stages art fairs annually in Switzerland, in Hong Kong, as well as Miami Beach. Now, in Miami it’s always a big cultural event; it’s a lot of fun. And it gives the art world a good indication of the direction of budding artists as well as established artists.

Sometimes I like to take a look at the art market to try to learn the economics of it. Art collecting is not like investing in other markets, so it interests me because it is so different. As a matter of fact, I did a segment on this some time ago entitled “Why Investing in Art Is Like Playing for the NBA.”

And you can find that on the show’s website, stevepomeranz.com. So to help me get my arms around this somewhat disjointed and confusing market of art, I’ve invited Lisa Schiff to join me. Lisa is President and Senior Advisor of Schiff Fine Art and is one of the leading and internationally recognized art advisors, and she helps to build private collections, and also collections for foundations. She’s been doing that over a decade. She has offices in New York, Los Angeles, and London. Lisa’s also known because she curates exhibitions for the Leonardo DiCaprio Foundation, and she is an art advisor to Leonardo DiCaprio.

Hey, Lisa, thanks for joining us.

Lisa Schiff: Hi, thanks for having me.

Steve Pomeranz: So, I never really understood what an art advisor is. Tell us what that role is and tell us how you got into it.

Lisa Schiff: So, I look at being an advisor as making the very opaque world of art collecting as transparent as possible—educating collectors and empowering them to have confidence in what they’re buying and what they like.

Steve Pomeranz: Interesting, so is there a lack of confidence in the marketplace because how does one know what the real value of something is? So much is about personal taste, as well as what the public likes or what the market likes. How do you discern the difference?

Lisa Schiff: I think it’s really important to understand first the pricing on artworks. And as impossible as that seems, it’s actually possible to wrap your head around it, but it’s complicated.

Steve Pomeranz: Yeah.

Lisa Schiff: It’s not just one price here and once price there; it’s a consensus of different things that come together to kind of make a value.

So really helping people understand that is a big service and it’s really helpful. So I’m not here to say you have to buy this because I like it. I’m here to say, “okay, if you’re gravitating personally, your personal esthetics towards that, then let me get you the best one of that.” Let me maybe guide you to a different artist that’s similar and better positioned all the way around. So it’s a little complicated, but it’s what we do.

Steve Pomeranz: So you don’t own an art gallery and sell the art itself?

Lisa Schiff: No, there’s art gallerists, there’s art dealers and art advisors. So I could explain the difference if you would like me to.

Steve Pomeranz: Sure.

Lisa Schiff: So, art galleries have, most of the time—although this is changing a little bit now with the Internet—so most of the time have physical spaces, oftentimes around the world, where they represent a stable of artists, and they work very hard to kind of filter into a certain strata of the art world.

I also want to step back and say there are many art worlds. I’m just talking about one particular one which I function in, which, of course, I consider the only one that matters, but there are various layers of that. So they represent these artists they build, they really build content, and that’s a very important role and a very difficult role to have; it’s very hard to be a successful gallery.

Art dealers buy and sell; they trade. And art advisors consult; they give advice. Now, there are people who do all three. So, there are art gallerists who advise and deal, there are art dealers who advise and deal, and are art advisors who deal. I fall into the latter.

Steve Pomeranz: So, you’re compensated by the individual who is out in the art market looking to purchase?

Lisa Schiff: Yes, my client is not the artist; it’s not the gallery; it is the collector.

Steve Pomeranz: Yeah, yeah. Your role is very similar to mine as a fee-only investment advisor by the way.

We don’t work for any company that earns fees from what we do; we basically get paid by the individual, like yourself. So I really can relate to that and I really think it’s great because you’re in a position of trust because you’ve got really no skin in the game except to try to do your best to make the right decisions.

Lisa Schiff: Yes, and it took me—I’ve been doing it now for about 15 years, and a few times I realized, actually it was my lawyer who said something to me one day, and I was like, God, it’s like just a light bulb went off. He’s like, don’t forget your client is not the gallery; it is the client, the collector.

And the galleries will, deliberately or not, kind of try to push you to please them, and you can see yourself getting caught up in some power games where you’re trying to impress them.

Steve Pomeranz: Yeah, yeah.

Lisa Schiff: And I really heard that loud and clear. And I loved hearing it.
And I share that with newcomers because sometimes you don’t even notice you’re doing it; it’s very subtle. I straddle a very fine line too because I have to keep the galleries happy because [INAUDIBLE] more than one person. But I distance myself a lot as well because I don’t want to get too cozy if that makes sense.

Steve Pomeranz: Sure, let’s talk about the role of foundations in the art market and private collectors. So there was some huge news a few weeks ago that a Leonardo da Vinci painting sold for $450 million. And what was particularly interesting was the fact that many experts said it wasn’t even painted by him, it may have been painted by one of his students.

What is going on in a market where someone will pay 450 million and it may not even be an original?

Lisa Schiff: Okay, first of all I was in the room for the sale and there were many layers of drama surrounding that painting. And my take, and everybody has a different opinion on this, but 1000% this was proven to be a Leonardo Da Vinci.

There is enough of his hand in this painting to sell it as such. And I think it’s just so miraculous that this happened. It’s one of those stories we all wish that we were the guy who found it in the estate sale and did all the work to it.

Steve Pomeranz: Yeah.

Lisa Schiff: But it was about over ten years of working to get this vetted. And it’s not easy to do. And I knew about it ten years ago. And they did so much work to kind of get the consensus of experts they needed together, and they did.

So I don’t really buy it. I also stood in front of it for a long time, and the point is, I don’t even care if it’s really a real Da Vinci or not. People queued up around the block ten times over to go see this picture, and that to me was so astounding and interesting because I don’t think it was just because it was Leonardo Da Vinci; I think that was one major part of it, but it was also a picture of Jesus Christ.

Steve Pomeranz: I see.

Lisa Schiff: I am not a religious person, but I think many people are, and it’s a very rare kind of picture for him. He usually does figures in groups or at least turned to the side, but this is a very iconic frontal image.

Steve Pomeranz: Yeah.

Lisa Schiff: And I mean, listen no one ever wants to say anymore that they’re an expert and they can say this is a Da Vinci, but there’s enough forensic stuff they can do now, and it’s well documented. So I don’t think there’s any question about the authenticity of this at all.

Steve Pomeranz: Well, I want to get into that in a minute, but we’re going to take a quick break. We’re going to be back with Lisa Schiff, art advisor to the Leonardo DiCaprio Foundation and to Mr. DiCaprio himself.

We’ll be right back.