The Art Market Monitor sat down with Ronald Varney in March to discuss his role as a Fine Arts Agent:
You just opened an office here in New York because your business is expanding even as we’re in the middle of a contraction of the international economy. I wanted to get a better sense of what your business is, how it’s going, and where you see it going?
I should back up a little bit: I started this company exactly seven years ago today. The idea of the company was to do the same kind of thing I did in the auction houses, which was dealing with bankers and lawyers on buying and selling issues, and as a fine art agent.
Essentially, I represent a wide swath of clients who basically come to me through their financial advisors, sometimes through their legal advisors, family offices and estate situations. I deal with private collectors, foundations and so forth. The goal is pretty much the same in every situation: to maximize the value of what we’re selling for the client; or to protect the client’s interests in navigating the art market, if they’re buying or selling or doing something else.
Yes, the market has turned down, and it’s having a difficult period. My feeling is, however, that you really do have to invest in your own business by committing to growth, long-term, and I certainly feel that the market is going to come back.
A lot of the relationships I have with clients are ongoing, they’re long-term, family relationships in terms of not just doing a transaction, not just an estate situation. We have a very large book on the floor down there called Vertical Art, which was just published last year. That was done for a client who has a very large collection, which will eventually perhaps be sold, we’ll probably have an exhibition of the collection, but I’ve been representing her now for the past three years, and this will probably go on for many other years.
So a lot of the relationships are longer-term, and I work essentially in an environment where the goal is to represent the interests of the client and walk them through, what I see from my own experience, as a very treacherous art market. The art market is not regulated, we don’t have an SEC in the art market. Fakes are sold, fakes of no value are sold for huge sums of money. I feel increasingly that the clients really do need to have an advocate to protect their interests as we move through the market.
You mostly represent on the sell side?
A lot of the clients we represent are selling things.
Can you talk about the dangers or the difficulties in selling, whether it’s how to sell a collection or individual pieces, and also the relationships that your clients are looking for from you?
A lot of times, they want to withdraw a little bit from the pressure of the marketplace. My clients don’t really want to be told that there’s a deadline coming up and they need to make a decision about doing something.
A lot of what I do is take the heat, let’s say, from getting things done that have to be done in a practical manner. For example, I was in Los Angeles last week seeing a client who has two residences. She has a number of things she wants to sell. She bought a lot of mid-century modern furniture and other things from a couple of dealers.
She probably overpaid substantially for a lot of these things. She bought two houses from a well-known film actress and she bought the house and its contents. We need to now do a reality check for her. What is the value of these things? Are they authentic? We’re not even sure about that.
Once we find out, once we get a baseline, we get an inventory of the things and the value and the authenticity, then we can make some decisions about perhaps selling some things, editing the collection, getting rid of some of the stuff that’s chaff.
And then, also, she’s very interested in this as a collecting field. Let’s move forward. The goal is, “Let’s start with what we have.” Sometimes you’re delivering bad news, which is kind of difficult. You have to tell them that something they paid $400,000 for is probably only worth $40,000 to $60,000 in estimate.
We start from there and move forward. If she wants to collect, then we start looking at some of the top dealers, we’ll look at things coming up on the auction market and we will help her move forward in a more deliberate way with some adult supervision.
So she bought the contents because it appealed to her, but she didn’t have a strong sense of what she was accomplishing. She’s resigned to the fact that she has to take what she’s got, consolidate, get a better sense of it, and move from there. And you raise proceeds from those pieces to buy the next things?
Right. I think it’s largely a matter of finding out the value of what you have. I think a lot of people in this market want to know that.
Increasingly, we deal with family situations where let’s say the family has things that have been passed down through the generations. They’ve made estate planning decisions based on the perceived value of things that perhaps don’t have any value. There may be paintings that were acquired years ago that are fake; there may be things that have gone up wildly in value, but the family doesn’t really know about that. There may be things for which they need liquidity pulled out.
So the first step is often to take a reality check. Let’s look at everything, let’s find out what it’s really worth, and then we can start making decisions based on that. You would be surprised by how many families don’t know the value of what they have.
I’m not surprised about it. I’m struck when you see stories about people who don’t know they have an important piece, like that Turner last year that just popped up. I doubt those people thought, “Oh, it’s some worthless painting,” it wasn’t up in an attic, it was something that they knew was valuable, they just were disconnected and isolated from the art world.
So in a market like this where people are very concerned about their financial investments and have seen the value of investments, the numbers vanish off a piece of paper, they start to look at their tangible assets as an alternative investment, shall we say, and they want to hold those assets up to the same kind of scrutiny as their financial assets. “Let’s see what these things are worth, is there marketability, do we need the liquidity? Can we take these things to market and get money?” I think in a lot of cases, what you’re doing is guiding people through a market that even in bad times still has hope for success.
What you’re saying is that the good side of what happened over the last three to five years, from 2003 to 2007, is it educated people to view these things as assets. Now that every asset has become important, it sounds like more people are focusing on making sure they have their house in order, as it were, not just treating it like it’s hanging around the place.
Yeah, it doesn’t have to be a painting by Renoir. Let’s face it, one of the great things about Antiques Roadshow, for example, is that it has educated people to the value of things. I’m always fascinated when I watch that show and somebody comes up with something from the Civil War, a musket or something else, and it turns out there’s a market for that, and you have an expert from some niche firm that handles Civil War memorabilia.
I think people have become much more aware of the fact that in the current global market, almost everything has value; there are buyers in every single collecting field. I think people are much more attuned to finding out what the value of those things is, and identifying them and finding out if they’re authentic, what their condition is, then perhaps approaching the market.
Most people are deeply intimidated by the art market, as you know. They’re incredibly intimidated by Sotheby’s and Christie’s. Those firms, over several hundred years, have built up a well-deserved and in many cases self-admired reputation for being elitist and exclusive–and they are.
It takes guts sometimes to walk into one of those auction houses and go past the doorman or somebody and walk in as if you know what you’re doing. For a lot of people, just picking up the phone and calling the auction house would be terrifying. They don’t want to be rejected, they don’t want to be treated like a nobody.
So that’s another minor aspect of my business, I become the client in dealing with the auction market. I’m the agent, I represent them. I make sure our phone calls are returned. I make sure we don’t get pushed around by an auction house.
I’m paid by my clients. I don’t take something from an auction house. I am completely independent of them, so that gives us a tremendous amount of clout in dealing on behalf of the client in sometimes very nasty, combative situations. We’ve had estate situations where basically we were kind of semi at war with the auction house over certain things. That’s what happens, people don’t always understand that there’s a honeymoon at the beginning, and then when you get into the process, it’s difficult.
Difficult to agree upon the value?
What was going to be in the sale, the value of what was going to be in the sale, things that we wanted to keep out of the sale for various reasons that an auction house could say, “This could make a lot of money, we want it in the sale,” that kind of thing.
The client always has their own interests and the auction house has their interests. So we have to make sure that we balance those and we basically get what the client needs most. We’re not going to get pushed around by these places, so we can stand up to them, in a sense, and get our own agenda fulfilled. I think that’s also part of it.
The art market can be a very nasty place to do business in, and most people don’t have that understanding of the marketplace.
Do you explore the option of making a deal with a private dealer?
We do that, too, yes. We get to know who the dealers are, their strengths, their weaknesses. There are a lot of dealers now who used to be heads of departments at the auction houses. So in many ways, that’s a good place to start. These are people we worked with before at the auction houses, and now we can pursue private sales with them.
A lot of people much prefer to do business privately, they don’t like the public ordeal of an auction, they don’t like the fact that there’s no certainty as to a sale. It’s a very emotional situation, it’s nerve-wracking, and in some ways, a private sale is much, much more preferable. So we have found there is some expansion in our business in private sales.
We have one situation now where we’re selling an important collection of English furniture through one of the auction houses this fall. The two most important pieces in the collection, we’ve taken out. They are multi-million dollar pieces. We’ve taken those out and are going to sell those privately, and they’ve just been delivered here to New York to a top dealer in that field.
We got estimates from one auction house on those two pieces, and they were just too low. We couldn’t even come close to getting back what the owner paid for them. We can get that back, we feel, with a private sale. So in some cases, dealers can sometimes achieve things that an auction sale cannot achieve.
When you’re dealing with these family offices, it sounds like you have relationships, but you’re also going through the ones who vet and view things, and they bring people to you for the same purpose. “Even if you don’t want to sell now, you need to have a longer term strategy.” Do they view a collection as something that has to go up or down but not stay the same?
Usually, when you’re dealing with a banker or somebody running a family office, they’re looking at the overall asset portfolio of their clients, so they’re dealing with any number of personal and professional issues having to do with those assets, and increasingly the art market has risen considerably in the esteem of many of these professionals, because they see art has really a global value, something like jewelry, that’s almost a global currency. You can sell jewelry anywhere in the world, it’s not like American paintings. People in England don’t buy American paintings, people in Germany don’t really…they’re not interested in American paintings. Jewelry, all over the globe.
Especially in Asia.
Right, it’s highly portable, you can sell it anywhere, its value never seems to go down. And even in recessionary periods, the jewelry market has been extraordinarily high-performing. So these financial people, they feel we should do a reality check with their clients on what they have, especially in multi-generational situations where the children are probably not going to be all that interested in a collection formed by their parents or grandparents.
The financial advisors have to think ahead, “What are we going to do with these things, are we going to put these things in a trust, so that the parents can live off the income and eventually they’ll get sold? Are we going to give them to museums? Can we afford to give them to museums? Are the museums even going to be interested in them? Are we going to give them to the children? Are we going to sell them so we don’t have battles over who got what…”
Because you can divide up the money easier than a diamond earring set?
Right. So there are a lot of issues that have to do with, “What do we do with these assets, what’s the long-term plan?” Financial people don’t presume to know anything about the art market, so they will do their vetting, they will look around, and a lot of times we will spend a good deal of time raising our profile with that community.
For example, in California, since I started my business in 2002, I’ve been out to California dozens of times, to Northern California especially. I thought that area had tremendous potential. It has lots of great museums, it’s got old money, it’s got new money, the Silicon Valley high-tech crowd, it’s a vibrant area. And it doesn’t have some of the razzmatazz of Southern California, it’s a little bit more low-key.
I thought that was a great place to start, and I systematically marketed our firm to select banks, trust companies, brokerage firms, law firms, out in that area. With a lot of the financial people, they get to know you, we give speeches to some of their clients at events, and eventually they feel comfortable with us, they’ve done their due diligence, and they introduce us to their clients.
So it’s a long-term process just getting to the point where you’re representing some of these people and you’re getting to know them. The family that owned this Vertical Art collection, they came to me through a bank. I gave a talk, their financial advisor thought we should meet, we met, we went to their house, and eventually we started working together.
It’s a family relationship now. I went to their daughter’s engagement party last year; the wedding is this June in San Francisco. We went to events in Paris together several months ago. You become very close to these people as friends as well as clients. We feel it’s very important to build up that kind of long-term relationship with these clients. So the financial people are very important to our world, because they really understand what their clients want, and they represent the kind of clients that we feel we can best serve.
Where do you see it all going? Everyone believes it will come back. So far, we haven’t gone that far down. We’ve gone down from the peak, but in terms of yearly volumes, we’re in the mid-2000s, which wasn’t a bad period.
No. If you talk to bankers and financial people, they will tell you there’s an enormous amount of cash on the sidelines now. What a lot of these financial advisors have been telling their people is to take the money out and keep it in cash, and people want to do that.
This is why there hasn’t been that much aggressive investing in the stock market. A lot of that is pent-up energy, a lot of these collectors, they’re still very active in the market, but they’re much more choosy, as you know, they’re much more picky. They want value, they want quality, they want to see things that are fresh on the market.
So what you see now is a lot of cash that’s idling on the sidelines, and serious collectors in fields like old masters, impressionist paintings, the more traditional fields, they’re active. From our point of view, there will continue to be a good deal of activity, it’s just that it’s gotten harder to judge what’s worthy and what’s not, and you had to be a lot more patient with the marketplace, because people are not going to be buying indiscriminately.
The clients become much much tougher in terms of what they expect, and they don’t really want a lot of high-pressure salesmanship. When you go into the art market, let’s face it, you’re kind of encouraged to make a decision about buying or selling rapidly. Auction houses, the first thing they’ll tell you is what the deadline is for the next sale that may be of interest to you in terms of what you have to sell. A lot of these clients now, they don’t want that pressure, they don’t even want their name known to the auction houses or to dealers. They want complete privacy, they want discretion, they don’t want to be embarrassed, and they don’t want to be humbled by the marketplace. So it’s all the more important for us to protect their interests while we slowly, cautiously, but deliberately move forward through the market.
Now they want insulation from the auction houses?
It’s a very public forum. If you had a painting and it fails to sell, it’s embarrassing.
Also, if you don’t know how to deal with an auction house, you can get pushed around pretty easily. You really can. I think if somebody’s a professional, self-assured, done well in a certain field, they go into the art market, they can feel like fools very quickly.
In many cases, their financial advisors tell them, “We need help here,” in the same way they have in the financial field what is called ‘open architecture,’ which means, essentially, that firms don’t sell their own products anymore, they can go out on the market and find the best products offered by whatever other firm, and they will put together a platform of services for that client, tailored to their specific needs, from wherever the best things can be found.
In many cases, the financial advisors we deal with are doing the same thing in the art market. They’re saying, “Let’s go find someone who can protect us, they’ll make the recommendations for us, and we’ll protect ourselves from the marketplace, we won’t have to go in there because we don’t really know what we’re doing.”
How many people are doing what you’re doing?
Very few. I don’t know anybody in this country who’s doing exactly what I do or who calls himself an agent, a fine art agent.
I started, really, at the suggestion of a man in London named Robert Holden, who’s really the dean of fine art agents, very distinguished, he’s had spectacular clients over the years, and when I was still in the auction house, I was thinking of doing something else, and I met with Robert. He said, “Nobody in America is doing what we do over here. If you think of leaving the auction world, you should set yourself up as a fine art agent, because there’s a real need for it in America, because there’s so many more estates sold.”
I don’t emphasize that business, I’ve found a much richer vein for me is backing up, before these people die, backing up and dealing with a family situation on a long-term basis, multi-generational, so that we can address many more issues than just, “Where should we sell it so we can make the most amount of money before nine months elapse?”
The thing with the family office makes sense, there’s a continuity to these things. You don’t just sell it all at once.
Also, there’s a certain amount of oversight, which we welcome. In other words, we have a silent partner in this, which is the financial advisors. They have a long-term relationship with the client, too. We become part of a team in representing the interests. In many cases, the financial advisors don’t really want to participate in any way, but they will remain in a role of oversight in terms of making sure that the client has a happy relationship with us in terms of what we’re doing on the overall plan.