Groundbreaking Insights on Creative Professionals

Building and Managing an Art Collection—CHF Interviews Megan Fox Kelly

As the head of her own full-service art-advisory business, Megan Fox Kelly provides curatorial and market advice, and fine-art services—including acquisitions and sales, strategic planning, collection management, and appraisals—to collectors, attorneys, financial advisors, foundations, and estates. Megan has advised artist and collector estates and foundations, including the Estate of Michael Crichton, The Robert A. and Beatrice C. Mayer Collection, The Terra Foundation for American Art, the Estate of Robert DeNiro, Sr., and the Robert Rauschenberg Foundation. She is the president of the Association of Professional Art Advisors, and a certified member of the Appraisers Association of America.

In this Q&A with CHF Editorial Director Sofia Perez, Megan addresses market strategy for collectors, art appraisals, and ethical standards for art advisors.

What does it mean to run a full service art-advisory business?

Art Business Conference

We serve our private clients by providing the market advice and curatorial support they need to successfully build, manage, care for, and sell their collections. We advise collectors on creating collections and work with them to acquire art through galleries, private dealers, and auction houses. We also help collectors and trusts with estate planning related to their fine-art collections and work with estate executors and beneficiaries on successful strategies for selling estate collections. In that capacity, we work not only with collectors and their heirs, but also with their trust and estate planners, financial advisors, and trust and estate attorneys.

Helping Art Collectors and Foundations Buy, Sell, and Manage Their ArtFor a variety of collectors and artist foundations, we also conduct appraisals for insurance, financial planning, and estates. In many ways, that appraisal work is the foundation of our business because in order to buy or sell art intelligently, we need to have the expertise to accurately value that art and explain that value to our clients. We cannot tell collectors what to buy or how much to pay for a work of art unless we ourselves have a strong understanding of value and the market as appraisers. In that capacity, I am a certified member of the Appraisers Association of America (AAA), which means that I have taken the requisite appraisal study courses and exams, and have over 25 years of expertise in valuing post-war and contemporary art. My experience and membership in the AAA enables me to do appraisals for insurance, and fair-market value appraisals for estates, financial planning, and litigation purposes.

In short, we provide a full suite of services. We function almost like a museum staff for our collectors and our artist-endowed foundations. We work with our clients on buying and selling art, provide their appraisals, create strategic plans for foundation collections, and assist clients with collection management when they don’t have curators or registrars on staff. Outsourcing that work to us so that their collections are cared for at a high level, and their records kept accurately and securely, is a service that most clients find very helpful. For many collectors, their fine-art assets represent a significant portion of their overall financial wealth. We liaise with their insurance brokers, accountants, financial planners, and others so that everyone has the information they need, and their work for our client is coordinated.

Why does a collector or an artist’s foundation need someone like you? Why can’t they just buy and sell on their own?

Many collectors who are new to collecting don’t really know where to begin. Often, they don’t have the time to learn on their own. In the past, collectors would allocate time toward learning about art, going to galleries, and deciding on the best pieces to select and keep in their collections. But the art world and art market were smaller then. In New York City alone, there are so many more galleries than there were in the 1950s and 1960s. Back then, there were a handful of galleries that were buying and selling art at a high level, and now there are dozens and dozens of them.

When working with our collectors, we are sorting through all of the material that’s available on both the primary and secondary markets—identifying those works of art that will resonate with them, that are going to be meaningful for their collection, and that are going to achieve their collecting goals. Our work involves research and a high level of due diligence on provenance and market comparables to ensure that our clients make the best and most informed decisions. We provide our clients with research and market intelligence that they might not otherwise access on their own.

For artist-endowed foundations, I am brought in to provide in-depth analyses of their artist’s market and help them with strategies for improving that market, as well as to create collection plans so that the foundation staff and board can make informed decisions about which works to sell, what to hold for the future, and what they might wish to gift to museums, in order to fulfill their mission. Often, the professionals who are running artist foundations have significant experience as curators or nonprofit managers, but the mechanics of the art market—even their own artist’s market—is not their area of expertise. I provide expertise and studies that support and inform their work.

Do some collectors see art-buying as purely a financial transaction—a blue-chip commodity—and buy what they already know they’re going to sell?

I have never been approached by someone who simply wants to buy for investment purposes, to create a kind of “art fund” within their financial portfolio. That is not the client that is typically referred to me. More often than not, collectors come to me with a balance of concerns: “This is the art I like. I want to learn more. I want to buy examples that are going to be meaningful to me down the road.” We always start with a dialogue, asking, “What are you trying to achieve in making a collection?” Because all of us have different levels of income and wealth, we all have a different breaking point at which a purchase needs to be an investment. We also ask, “How important is investment to you in your collecting and at what level?”

They don’t want to make a mistake by spending too much on a work of art when they don’t need to. For most clients there is a price level at which it doesn’t matter to them whether a work appreciates or holds its value, if it’s something that they like. At a higher price level, they might say, “We want to know that we’re buying something that is a good investment because it will hold its value or appreciate over time.”

So it’s an ongoing communication and everything a client tells you is intel that helps you read what they want.

Exactly, and every single client is different, so every single relationship is different. Knowing what a collector wants to achieve helps us to deliver the best services and expertise.

Do you ever encounter people who are tempted to rely on interior designers—“I want the blue piece because it matches the couch”—instead of someone with art expertise like you?

I always go back to their goals. “This object might fit aesthetically with this interior right now, but is this a work of art by an artist that you can really commit to collecting at that price level? Does this fit what you’re trying to achieve with your collection?” Because let’s face it, interior design changes. Your décor today is going to look dated in 20 years. Great art is going to transcend changes in decorating style.

I actually work with a client—a designer—who is extremely well respected and very sophisticated in her taste in art. She has worked with some of the best collectors in this country. More often than not, this designer and I agree on the art for the client’s collection. She may have concerns about the scale of something in a room, while my priority for the client is the right object for their collection, so there is some give and take, but it is a great professional collaboration.

It all goes back to those initial conversations about what the clients are trying to achieve. Obviously, I can’t buy a work that will not fit in their space—unless they have an intention to build a museum, or to buy works that will eventually go to a museum. Those are very, very rare occasions. With most clients, a work needs to fit within the interior or exterior of their residence.

Do you ever feel that your own curatorial or personal taste affects the advising process?

I try to keep my own taste separate. When I am walking around at an art fair, for example, I try to look at everything through the lens of my various clients.

Does it matter to have a through line within a collection, even though a private one will probably get broken up anyway?

Sometimes yes and sometimes no. Occasionally, when people come to me, they do not know what they want to collect. They might have a general idea, and as we begin our discussions, I see that they are drawn to certain types of work repeatedly, so I might pose questions such as, “What if we were to build a collection around this idea?” or “What if we bought things from this period or movement in-depth, or this particular artist, because visually you appear to have a real interest in it?”

There are still going to be those outliers, those pieces the client sees and loves, or that I may introduce to them, that are really exciting or inspiring but don’t necessarily fit that through line. That’s when the collection does get broader. I will always suggest it—to try to focus a collection—but it’s a matter of whether a particular period or type of art sparks a certain enthusiasm in them, whether they want to go more deeply into something.

It makes me think of the recent Lincoln Kirstein exhibit at MoMA, which was drawn from his personal and very wide-ranging collection. At the end of the day, the common denominator in every collection is the collector, so that can be seen as a kind of through line.

It certainly can. Working on estate collections and handling the sale of great collections have informed my perspective. Not only do I see the whole collection that I’m dispersing, but I’m also seeing that they bought a particular work, and then a few years later, they bought something related or complementary to it. Retrospectively, I have the privilege of seeing how a collection was built, and in going through their archives, I can often see works they purchased but then sold during their lifetimes. I can see when they switched from collecting Impressionist and Modern art in the late 1940s and early 1950s, to the moment when they bought their first example of Pop art and never looked back. If you compare that collecting transition against the Impressionist and Modern works that they were buying in the beginning, there’s no comparison—it’s the quality of the works they bought when they had really ignited their passion versus those that they were buying when they simply thought, “Well, we need some art for our house.”

It’s interesting to see the paths that have been taken when a collector has built something truly great. It’s useful to have that insight and background to use as teaching examples with existing clients who want to build collections.

It’s such a fascinating process. I’ve never thought about looking at the evolution of the collector and seeing what works have come and gone from a personal collection.

When you mentioned Lincoln Kirstein, it reminded me of how that collection was built. So many different relationships and experiences went into it, and does it surprise us that it’s somewhat eclectic? No, not at all. It’s really a portrait of a life and a career.

I’ve seen collectors who collect in great depth. One of the collections that I handled recently was the Irving collection, which was sold through Christie’s in March of this year. The Irvings were passionate philanthropists; they gave nearly all of the money for building the Metropolitan Museum of Art’s Asia wing, in addition to hundreds of works of Asian art from their own collection to populate that wing. What was sold at Christie’s represented the works that they had held back for themselves.

Here was a couple that collected broadly within the category of Asian art—meaning that they had great examples of Indian, Chinese, and Japanese art. However, they just went mad for Japanese lacquer; they became great connoisseurs and had incredible examples of it at a time when not a lot of other collectors were acquiring lacquer in depth, which allowed them to assemble a first-rate collection. I think that for them it was a joint experience of discovery to find those pieces of art, study them, and develop a deeper relationship with it than the approach you and I were talking about a moment ago—the idea that this blue painting matches the sofa.

When you’ve really come to know an object—what its creator was thinking, the craftsmanship or the innovation that went into it, or whatever it is that made that object special—you engage in a much deeper way. I think that’s where art becomes rewarding, beyond making an interior space more enchanting.

You’re the president of the American Association of Art Advisors, the APAA, which is the standard-setting organization for your field. What ethical standards does an advisor have to meet in order to be admitted? And why do they matter?

The APAA believes that professional standards matter a great deal, especially in recent years as the field of “art advisory” has grown to the point that anybody with a degree in art history or an interest in art can decide that they’re going to help people pick out art, as if doing that is akin to shopping. APAA advisors are not personal shoppers. We value expertise, education, and ethics. Those are the criteria with which the APAA evaluates potential members of our organization. Ethics are at the core. Some people will go to a dealer to get advice, but we are independent art advisors, so we’re different from dealers who might advise a collector to buy this work or that, whether at auction or at their own galleries.

By that I mean that we do not hold inventory. We do not represent artists. We help collectors buy in various markets, but we are not selling them something that we own ourselves or that is on consignment to us. While we might help a collector to sell a work of art, it is not on consignment for us to sell to another client. Our responsibility is always to the client. Whether that client is a buyer or a seller or a foundation or an insurance company that requires an appraisal, our fiduciary and professional responsibility is always to them, not to ourselves, and not to the dealers, auction houses, or artists. That’s really the core of it. As members of the APAA, we commit to always provide the highest level of expertise possible. It also distinguishes us to the public, which was our intention, and to potential collectors, the dealers with whom we work, the auction houses with whom we engage—distinguishing between our members and other art advisors.

When I first became a member of the APAA, what I valued the most was that there was a network of other professionals to whom I had access. Prior to that, I think I knew maybe two or three other art advisors. If you have an installation need, a framing need, or a conservation need in just about any part of the world, there is a collective expertise shared among our members that is extraordinary.

How can APAA advisors make the market function better—to benefit others in the art world and make the market more transparent?

Everything is always transparent with our clients. Because of that transparency, our clients benefit from the same transparency with dealers and auction houses. For example, if you’re receiving any kind of commission or compensation for the works you are selling on behalf of your clients, it is contractually revealed to them in all of the transactions and contracts. The way that auction houses do business aligns with the way we do business. We help to bring additional expertise, either in consigning works to them or helping them present a work of art owned by our clients, providing all of the information we can possibly find. In that way, it’s a mutually beneficial relationship.

The same goes for dealers. When working with an APAA art advisor, it is always clear from the beginning how any future transaction is going to unfold, which is not always true with other brokers or art advisors. Whatever fee we make is disclosed to our clients, whether it’s a retainer or a commission that’s based on a transaction.

I know you don’t work with artists, but what do you think they should know about why and how people buy art?

Collectors buy for all different reasons. Some will see an artist’s work, and like it and buy it, whether that artist has a gallery or not. It doesn’t matter if that artist’s work is going to hold its value.

In order for something to hold its value or go up in value, there needs to be a secondary market for it. If you bought a painting for $1,000 and you wanted to sell it ten years later, where are you going to sell it? Is there a gallery or an auction house through which you can sell it? If not, how is its value established? Unless there’s a method to resell something, there isn’t a way to determine its future value. A collector who cares about that factor will very much ensure that a secondary market exists.

Someone who is not interested in the future investment value of an object is going to care less. They’re going to buy what they like. Understanding the motivations of certain collectors is something that’s really important to my business. When artists ask why their work is not selling or why certain collectors have not bought their art, the simple answer is that they weren’t interested in it.

Tell us about your collection-management services and why they’re important.

We maintain databases with information about our clients’ collections, and we use those databases to produce our regular insurance appraisals or fair market-value appraisals for their collections. It is a way to digitally manage records of all aspects of their collections—such as framing, conservation, movement, insurance, changes in value, and loans, to name just a few aspects that are monitored.

We have a bespoke database system that’s germane to our practice. While I am aware of other database systems that exist, over the years we’ve developed something that works for us—a system that’s flexible, in terms of adapting to different databases for different clients and their collections.

Let’s talk about market strategy, which is another service you provide. How do you read the market?

The market strategies that I provide are specifically for artist-endowed foundations. I’m looking at the market for my collectors. Should you sell now? Should you sell later? What’s the best means to sell this object? Is it at auction, or does this artist sell better privately?

A large artist-endowed foundation that holds a substantial collection may have a financial endowment that supports their operations. However, many intend to sell works by that artist and use the proceeds to build their philanthropic endeavors, legacy programs, and produce a catalogue raisonné. Preserving and conserving the work, promoting the artist through exhibitions, and all of the activities that these artist-endowed foundations do—with respect to the artist’s legacy and the philanthropy that they have decided to pursue—is funded through the money and art that they received at the artist’s death.

I am called in when the foundation board begins to address which works they should sell and when. Questions that I pose include: “What should we hold back? Should we create a strategy for selling certain series of works over time? Perhaps our artist is not getting the attention that he or she should be getting. Do we need to look at a new gallery? Do we need to create a system of multiple galleries?” I provide an in-depth analysis of the artist’s existing market, from both market records and interviews with people, in order to understand the dynamic of that artist’s market, where the strengths and weaknesses are. From that, I develop a strategy for the foundation to help improve an artist’s market over time.

Sometimes, it means being realistic about what can be achieved. What can the artist’s foundation expect to realize financially through sales aligned with the foundation’s financial needs. If, for example, there’s an expectation that the paintings should be selling for $500,000, but they’re actually selling for substantially less, then this disconnect between anticipated revenue and what the market can really support requires a recalibration of the kinds of programming they can expect to execute as a foundation. It is a very healthy process of helping the foundation align their market with the strategic plan that the foundation has established.

Has anyone ever gotten mad at you for your appraisal of a work?

I hope not. To ensure that it doesn’t happen, we have conversations ahead of time, and I try to obtain all the necessary information that I need to produce an effective appraisal. There’s always a point in the conversation where one might need to make adjustments because the client may have insights about something that they didn’t share with me initially.

How do you determine the right moment to sell a piece?

It’s a different set of factors for every single artist and work of art that’s being considered for sale. You are looking at what the market is doing now, and what you might anticipate the market will be. Are there events coming up in that market—whether it’s a retrospective of the artist, or a work that is very important within the artist’s oeuvre that might come up at auction—that could set a new price threshold?

Sometimes the decision to sell is based on need, quite frankly. For example, an artist-endowed foundation may have a pressing need to sell a valuable work of art in order to fund a catalogue raisonné, which can be a multi-year endeavor. Sometimes, selling a work in the near versus long term makes the most sense because the value of starting or funding that project might exceed the perceived increase in value for a work of art over a period of time. It’s really an analysis in each circumstance and for each work of art.

“Perceived” seems like the magic word. There’s no guarantee the increase will happen anyway, so you have to make a judgment call against all of those factors.

Exactly. If the market is seen as being on a downward trajectory, it might be smarter to sell now so that those assets can be converted into other objects that the collector may want to acquire for the collection, or whatever the specific goal might be.

What can living artists do to ensure that their legacy endures, and that their work and name are cared for properly after they’re gone?

Talk to an attorney. A good attorney, someone who has experience in planning for artist estates, is going to help them think through all of the different questions. There are also a number of resources out there in addition to your organization’s website. The Aspen Institute has the Artist-Endowed Foundations Initiative; they run seminars and have publications that address these concerns.

I’m often asked to speak at those seminars, and artists are often there. The artists—and sometimes their future foundation directors—attend these events to learn about the whole process. I think that’s a very useful step even before you talk to an attorney. You are developing an informed understanding so that you can discuss the issues with your attorney and create a plan for all of your art.

You handle so many different tasks for your clients. What do you love the most about your job?

For every single one of our clients or projects, I identify what they want to achieve and what’s really needed. Sometimes what they want to achieve and what’s needed are two different things, but that’s what drives the business. It’s why I decided to be an art advisor instead of a dealer. I would rather come to someone and say, “How can I help? What do you need? What’s the problem to solve?” rather than, “Do you want to buy this?”

Every time we make headway on that—every time I’m able to remind the client, “Here’s what we just did. Here’s how it aligns with what you said you wanted to achieve”—and they see that they’re making the kind of progress they wanted, that’s rewarding. Obviously, success is rewarding, too. When I sell an estate for the family of a collector, when it sells terrifically and breaks auction records, which allows them to maximize the estate’s financial return, that’s enormously rewarding.

It’s knowing that we’ve done the best we possibly can, everything we can think of, to help the collector or foundation achieve their goals. Last week, after I finished a specific project, the client asked me, “What would you do differently?” I said, “Absolutely nothing.” Because I knew that the team I had assembled to execute the project had really thought through every detail, every aspect, and that the result was more than any of us could have imagined.

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