Wealth - The Art of Acquisition

Passion comes before profit when investing turns to collections

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Barbara Ernst Prey works with top private and institutional collectors. The Henry Luce Foundation, President and Mrs. George Bush, Mr. and Mrs. Richard Mellon, Mr. and Mrs. Sam Bronfman, and actor Tom Hanks collect her large landscape watercolors. Her work hangs in the Smithsonian American Art Museum and Kennedy Space Center, and 100 U.S. embassies display her prints. In 2003, the White House commissioned her to create its Christmas card.

“You have people wanting to buy your work as an investment. Those aren’t the collections I want my work in,” says Prey, who serves on the National Council on the Arts, the advisory body of the National Endowment for the Arts. “When you try to buy an artist’s work as an investment, you don’t know if in five years they will be hot or what will ultimately happen to their career.”

No matter what you collect, experts agree passion rules when buying. “When you love a piece, the risk factor is automatically reduced,” says Nicholas Lowry, president of New York’s Swann Auction Galleries.

“Art is not a great investment to flip these days,” says Andrea Fiuczyznski, president of Christies in Los Angeles. “It’s an alternative-asset class in a volatile market.” Even buying what you love comes with caveats. “Emotion can lead you astray if you haven’t researched what you are buying, especially at auction. I’ve seen bidders with serious buyer’s remorse the day after an auction.”  

Fredric Roberts — a Los Angeles-based photographer, retired investment banker, and contemporary art collector — started collecting by buying a suite of 11 pop artists’ silk screens, including works by Andy Warhol and Roy Lichtenstein, for $600. “Today some of the individual pieces are worth $50,000,” he says. “I bought them because I loved them, and I also knew they were a good buying opportunity.” He still owns all 11 pieces.

John Graves, a collector of first-edition maps and fine wines, looks at collecting from several angles. As a longtime wealth advisor for retirees and those nearing retirement, he sees a collection becoming valuable when a piece of it reaches high five figures. His advice to collectors and clients: “When you buy anything for a large sum of money, buy it from your heart.” Graves has promised his map collection to Ventura County Maritime Museum.

Steve Johnsen of La Quinta started buying 20th century decorative arts years ago. Today, he has a large Van Briggle pottery collection. Van Briggle’s work is known for its beautiful glazing and carved figurines. “Decorative 20th century pottery has gone through the roof in value since I started buying,” Johnsen says. “I didn’t intend to have a formal collection initially, so I sold off some pieces that I now regret selling.”

Jim Corona of Heather James Fine Art in Palm Desert, advises people either building a collection to gift or buying for investment to follow the same philosophy. “Try to buy the absolute best example of an artist’s work that you can within your budget parameters.”

Jim Casey, president and CEO of Integrated Wealth Management, says, “The enjoyability factor of a valuable collection balances traditional investments in an overall portfolio.” Buying what you love will always pay personal dividends.