Philip Hoffman needs little introduction to the art world. Having worked at Christie’s in London for twelve years running its European division, Philip Hoffman launched the Fine Art Fund Group in 2001 – an art advisory and investment house that currently advises some of the most significant art collectors worldwide and is globally recognized as one of the largest of its kind.
The Fine Art Fund Group was the first private equity fund of its type to invest in art, read more at fineartgroup.com
How and when did you come up with the idea of starting art investments funds?
Philip Hoffman: Whilst I was working at Christie’s in London, I could not help but notice that some people were making a lot of money through the art they bought and sold. It was always the same people getting hold of the right deals, as they had the right market information. After a while, having developed a strong network and knowledge of the way the art market works – which is a very particular one – I thought to myself: “I can make these deals as well!”
The idea of pooling money together to make these deals was simply to enjoy the economies of scale that come with dealing at the higher end of the market. Having a large financial backing also puts you in a stronger position when negotiating with auction houses and dealers, which again allows you to make better deals.
After a while, having developed a strong network and knowledge of the way the art market works – which is a very particular one – I thought to myself: 'I can make these deals as well!'
This slowly developed into an additional general art investment and advisory firm. This idea came quite naturally after sensing that a large group of people were curious about the art market but found it difficult to discuss its financial value with the dealers and advisors at the time as they still considered this a taboo. I noticed that, actually, a lot of collectors did want some information about the potential price development of their works. This is especially the case in the higher end of the market as the prices have become so steep – if you are spending half a million dollars on a painting, you do want to make sure it holds its value.
The high prices in the art market can seem intimidating and confusing to people starting a collection – what advice would you give them?
Philip Hoffman: Make sure that you go to all the gallery and museum shows, study the artists and movements that interest you, go to the fairs and openings and just enjoy the journey. This way, you will develop your own taste and this will make you feel a lot more confident about moving in the general art world. You will also get an idea of why certain artworks make record prices and others do not. This is something we try and help our clients with – for example by keeping them up to date with developments about artists they like but also by walking around art fairs with them and showing them art that we think might fit in with their collection. Advising a client is very much about understanding what they want and educating them, it’s not about telling someone what to do. In fact, we largely tell our clients what not to buy.
Generally, I would advise people to develop an idea of what they like and would love to have in their private collections before they start buying
It is very time consuming to keep track of price developments and a good professional network within the art market is a must. A lot of our clients do not have the time to do this. Additionally, it simply is not as much fun as the other elements of art collecting. If one is looking to buy art with an investment perspective, I believe it is key to have very strong guidance and help as there are very few people who actually know what they are doing.
Your company looks at art from an investment perspective and has arguably been the most successful in doing so. Looking at art this way is still considered somewhat controversial by some people – how do you see this?
Philip Hoffman: Primarily, I deal with and come across people who buy art because they love it. That is their main motive for collecting. However, they also have an investment perspective in mind, especially when buying works at very high prices. It still amazes me that, with the current state of the art market where there are art works going for tens of millions on a regular basis, this could be considered controversial.
Advising a client is very much about understanding what they want and educating them, it’s not about telling someone what to do. In fact, we largely tell our clients what not to buy
There is a story I usually tell which is about someone I know who bought a work by a contemporary artist in New York during the 1970’s for around thirty thousand dollars. He really liked the artist and this particular work, so he hung it in his living room where he and his wife enjoyed the work every day. In recent years, works by this artist have been selling at auction for about ten times as much as he paid for it in the 1970’s. When he finished telling me the story he said: “Philip, I can’t help myself, but I enjoy looking at the painting even more now!”
You must have had some very interesting experiences dealing with all these collectors at the very high-end of the market.
Philip Hoffman: The journey has been an incredible one and that is what it is all about. I have travelled all over the world with my business and met some of the most interesting people worldwide. Currently, I am serving on the advisory board of the National Portrait Gallery and the Chelsea Westminster Hospital in London, which is an incredible experience and great to be involved with institutions such as these.