Not long ago, insurance agent Pamela Averick asked an art collector she knows whether he’d made any long-term provisions for his collection of 100 contemporary prints — notable for its Jasper Johns and Robert Rauschenberg pieces.
Averick, a member of the just-formed Art Succession Advisory Council, sits on the print collectors committee of the Museum of Modern Art in New York City, as does the collector.
“When I asked him in passing what plans he had in place, his jaw dropped,” says Averick. “He had never even thought about it.”
The Art Succession Advisory Council is a small joint venture with a big plan: to help advisors bring world class planning to wealthy clients who have amassed art, antiques and other collectibles.
As Randy Fox, founding principal of Naperville, Ill.-based InKnowVision, puts it: “It’s easy to get people to talk about their financial stuff, but these things they spend a lifetime collecting, no one talks about. They collect all this cool stuff but they never plan for it. It’s an interesting and unique problem to have.”
InKnowVision, which designs wealth transfer planning and income solutions for advisors serving affluent families, and joint venture partner The Briddge Group, launched the council in September, after almost a year in development.
“The goal is to have advisors in selected communities who are capable of interfacing with clients in a different way. We’re talking about things other advisors aren’t talking about,” says Fox. “Every time we bring this up anywhere, they say no one’s ever mentioned it before.”
Already, the advisory council has a national footprint — targeting a huge yet overlooked niche: art assets.
“Most advisors aren’t accustomed to thinking about art as a financial asset that can be used to create income, fund a trust or otherwise be leveraged in ways that are commonly adopted for other classes of assets,” notes Michael Mendelsohn, founder and managing director of The Briddge Group, which in art circles is widely regarded as the premier art succession planning firm in the country.
“Most advisors don’t know a Rothko from a Degas. To be honest, they don’t know the front of the canvas from the back of the canvas. And clients don’t know what they have,” adds Mendelsohn, who is based in Rye Brook, N.Y. “We’re here to help redeploy their thinking.”
Path to Planning
Advisors who have joined the advisory council already have deep practices with an A-list of clients but this new niche has created an opportunity to cement the relationship even further.
Michael Glowacki, who heads The Glowacki Group in Los Angeles, recently approached a client who has a robust collection of original New Yorker magazine covers about planning for their eventual disposition.
“He was jazzed. It’s like having a conversation with kids that are five years old trading baseball cards. It’s that kind of passion. And it’s an easy conversation to have because you’re connecting with him at the level of his passion. And he loved the idea of having a logical solution to an emotional passion.” says Glowacki, whose average client has a net worth of over $10 million. “The thing is people don’t think of their collections as an investment. They don’t know what they have or they don’t pay attention. Now you can provide some responsible structure for it.”
The strategy Mendelsohn has developed is simple: to help collectors become aware of their ability to keep their collections intact and to assist advisors in developing more tax-efficient art distributions to heirs and art-related institutions.
The risks associated with failing to plan properly? Family art wars, tax problems and the loss, in some cases as much as 75 percent, of the collection’s value due to a poorly structured estate auction sale. Mendelsohn, a philanthropist and art collector himself, has a term for it: the “moving van” strategy.