'Our Business Has Got to Be Profitable, Professional, and Fun': Fine Art Group Founder Philip Hoffman on How Art Investment Has Evolved (2024)

After a remarkable career as a finance director at Christie’s, Philip Hoffman founded The Fine Art Group in 2001. The London-based art advisory, finance, and investment firm serves clients all over the globe and has become a near-billion-dollar business. Hoffman, for his part, is still regarded for the skills that set him apart at Christie’s—a shrewd business instinct and extreme diligence in demanding heightened transparency in all deals. Ulvi Kasimov, the founder of .ART, recently head to Mayfair to speak with Hoffman about the trajectory of his career and current state of art investing.

How would you define your role in the art world?
Ninety percent of the time my job is guiding our clients, rather than constantly selling to them. This is the opposite of many of my competitors, who focus on selling as fast as possible. If it’s too good to be true we stop a deal happening, whether it’s a purchase at an inflated price, a fake, or a badly timed sale. We value our long-term relationship with our clients and that comes from being honest, not taking advantage of every possible commission.

Do elements of the market deliberately mislead?
I wouldn’t say there’s corruption. I think that’s the wrong word. I might say it’s opaque. And that’s why I don’t deal with a big chunk of the art market. I’ve been working in the art market for 30 years, long enough to see many of the things that go wrong. The sad side of the art market is that it’s not always transparent. People are not straight. They don’t talk honestly about the facts and they gloss over the problems. Dealers are under such high pressure to sell. Without transparency, it can be difficult for collectors to know whether an amazing deal they are being offered is all smoke and mirrors. Pricing in the art market is incredibly difficult. What our client’s value most is the art team’s ability to accurately price an artwork. Even though sometimes, when we are valuing a collection, it’s not what the client wants to hear.

Are you talking about the entire art market including the artists?
I exclude artists. The artists, I think, are pure. They have a lot of fun. If they’re good they get treated like rock stars.

How are you fighting against these “mistruths”?
I say, “We will earn a fair and square living; very transparent and no surprises.” There are very few people in this industry who do that, which is why our clients trust us and stay with us.

We do our own due diligence and provide that to our clients. Most people don’t do anything more than ask, “What price are you asking? What was the most recent auction price? How do we get away with the maximum number above that?” And then come up with some story. My philosophy is to cut out all the bullsh*t and say, “Is this a great picture? Is it in perfect condition? Have we got all the top restorers in to check it? Have we done all the homework to check the history of this picture?” And that could take five hours; it could take 50 hours. Sometimes it’s taken three months on a major picture worth $50 million.

Have you ever pulled out of a deal after this due diligence?
I took my client out of the deal to purchase a painting for $35 million. Despite my client offering me £500,000 to close the deal, I said there was a five percent chance that the provenance was wrong: it was either worth $35m or $10,000 – because the frame was worth $10,000! If the provenance was right it could have been worth $50 million ten years hence but there was missing history so I advised my client not to buy it.

How did your client react to your advice?
They nearly went mad with me. I nearly lost him as a client. It was a very difficult moment because they said, “We pay you to close deals.” I said, “You do it off your own bat, but I don’t want any money. If you want to buy it, go ahead but I’m out.” Very few people have ever said that to him. Ninety-eight percent of the market would have done that deal, but I refused to do it. So he backed out, and he is still a client today.

What research do you undertake to verify the provenance of a work?
I often use the analogy of an individual buying a house –they wouldn’t go through with it without consulting a surveyor. I argue that when you buy a company for say five, ten or 20 million dollars you bring in your accountants, tax people, lawyers, and forensic guys to check everything out. It normally takes you three months to close the deal.

'Our Business Has Got to Be Profitable, Professional, and Fun': Fine Art Group Founder Philip Hoffman on How Art Investment Has Evolved (1)

The facade of Christie’s London auction house. Courtesy of Christie’s.

How did you find yourself in the art world?
I became finance director at Christie’s at 27 years old, with an ACA qualification in accounting and no previous experience in the art market. In fact, the closest I had come was buying Heath Robinson cartoons and antiquarian books as a student. I told the chairman at Christie’s that I couldn’t spell Canaletto, let alone name more than three artists. They said it didn’t matter; they wanted me to bring some proper management into a disparate business. By 29, I was deputy CEO of Christie’s and, by 30, I was on the management board, running half the business worldwide. I left to set up The Fine Art Group in 2001. I still collect antiquarian books and Heath Robinson cartoons, but working in the market has introduced me to new artists.

You say you had no interest in the art world. To what do you attribute your success at Christie’s at such a young age?
I’m an entrepreneur at heart and this was an opportunity to turn Christie’s upside down. I was the only chartered accountant in the group worldwide at that point. I took a cut-throat approach, saying that the business was pretty poorly run; the waste was enormous and the amount of money that could be siphoned out of that business properly was colossal.

In what way was the art market in general inefficient?
Most artists and art-minded people are less concerned with the financial and business aspects of the market; they don’t see how they can control the outflow of money and they get into habits and then money just filters out the back door as fast as it comes in. When I first started at Christie’s far too much was being spent on lavish parties and beautiful catalogues. There wasn’t a link between revenue and cost.

How did your focus on cost-cutting and profitability go down?
Like a lead balloon. You’re talking about another generation. I was 28, and the people I was trying to convince were 50 to 60 years old. They had been at Christie’s or in the art market all their life so it was very difficult. But I joined in 1990 and in 1991 we were heading for a £3m loss. I helped take the business back to £7m in profit so I helped generate a £10m positive shift.

Your current business is based in London’s Mayfair. What does The Fine Art Group do? What is your core philosophy?
We have three core businesses: art advisory, art-secured lending and art investment fund. Within these we are underwriting artworks at auction, advising international art collectors, managing one of the largest collections in the world and loaning against art works as collateral. We get to work with fascinating people and incredible art. Everything we do in our business has got to be profitable, professional and fun. If it’s not all three I don’t do it.

You founded the first private equity art fund in 2004. Your art fund is now worth somewhere between $600 million and $1 billion. How does it work?
Exactly like a private equity fund. We buy, hold, and sell art either long term or short term. Our backers are 140 families in 25 countries. We use the private equity model of drawing money down when you need it and buying art and selling it when there’s an opportunity. And 18 years on, we’re doing bigger and greater, faster and more interesting things every day.

What kind of returns can a typical investor expect from an art investment?
Art funds give people access to deals and expertise. I recommend that people only invest five percent or less of their wealth into art and that you need to buy blue-chip to get a good return. My view is that you can make between 3 to 4 percent per annum up to 13 percent “internal rate of return” which takes into account associated costs involved in an investment.

'Our Business Has Got to Be Profitable, Professional, and Fun': Fine Art Group Founder Philip Hoffman on How Art Investment Has Evolved (2)

Frank Auerbach Head of William Feaver (2003). Collection of Gina and Stuart Peterson Courtesy The Tate.

What are your ambitions for your own wealth?
I’m not doing this for the money, I’m doing it as a challenge. I’m not interested in aspiring to the same level of wealth that my clients have. We look after some of the most interesting clients in the world: billionaires, multi-billionaires; they have every luxury you can imagine. It’s great to be invited to join in once in a while but I’m not envious. I don’t want to achieve that type of wealth because it does nothing for me. But building a business is an interesting challenge.

Have you developed any love of art from your early days of ignorance?
Yes, I have! I now have some very interesting paintings – Bridget Riley is in my personal collection for example. I get on extremely well with artistic people. I’m surrounded by the best people in the art world, so it would be nuts not to use their professional help.

Who is your favorite artist currently?
Personally, it’s Frank Auerbach. I love the thickness of the paint applied. I’m amazed. I suppose I’m mathematical so I also like straight lines. If I could buy a Mondrian – it would cost $40 million and I don’t have that money right now. So my dreams I would have an old master or two; a Monet; and I would skip Picasso and have a Mondrian and an Auerbach.

This interview is excerpted fromKasimov’s bookThe Art of the Possible, a series of interviews that explore the ways Internet technology can remake the art world. Additional interviews from the book will be published here in the coming months.

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'Our Business Has Got to Be Profitable, Professional, and Fun': Fine Art Group Founder Philip Hoffman on How Art Investment Has Evolved (2024)


Is art a good option for investments Justify your answer? ›

Art is a long-term investment, unlike many other investments. It's also an asset you can enjoy while you wait out any potential recessions. Therefore, buying art as an investment can be an excellent way to diversify your portfolio. However, art investments should always be one part of a well-diversified portfolio.

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It is often part of the social audit of a company. Research shows that art in the workplace reduces stress, increases creativity and productivity, enhances commitment, broadens employee appreciation of diversity, and encourages discussions.

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Art is most certainly an asset in the broadest sense of the word. Its aesthetic, cultural or historical value can be limitless.

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How much art should be in a portfolio? Moses says it depends on individual circ*mstances, but 10 to 20 percent is reasonable. The category has been popular with institutions.

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Art is an excellent way for investors to diversify their funds and collectors looking to store value. Granted, art can be risky if one buys without a proper advisory. Art valuations happen pretty differently from the stock markets. Art has proven to hedge greatly against depressions and crashes.

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Art is a long-term investment, and while the art market can be stable or show large returns on investment during boom times, it is one asset that can easily plummet in value during seasons of recession.

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Increases Productivity: We connect with art because it conjures a memory, emotion, and promotes lateral thinking. In an effort to increase productivity, many companies use art to energize their employees, promote creative thinking and in turn, improve employee retention.

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Why Having a Corporate Art Collection is Good for Your Business
  • Art Creates A Culture of Creativity. Artwork can influence workers in a remarkable way. ...
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  • Art Demonstrates a Connection to the Community. ...
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How do I start my own art business? ›

10 Steps to Start a Successful Art Business
  1. Create great work. ...
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  5. Regularly review your business plan. ...
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  7. Make it easy for your fans to “connect” with you.
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What art should I invest in? ›

Modern art investing

Works by contemporary artists are the best-performing segment in the market, but an acclaimed original painting by a legacy modern artist is more certain to appreciate in value. Even lesser-known pieces could go up in value if they're attached to a famous name like Picasso or Dali.

Is art a good investment 2022? ›

Investing in art is a good way to diversify your investment portfolio. However, it's best to invest in this asset if art is something you truly love. That's because art investment can be quite risky and usually requires a lot of research.

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Platforms like Maecenas and Masterworks allow you to purchase fractional shares, or slices of valuable works of art. Investors can open an account with as little as $1,000. Fractional shares allow you to buy a portion of many different pieces of art, diversifying your portfolio.

How do I submit an art portfolio? ›

Your starting point should be looking at the website of the gallery you are interested in submitting your art portfolio to. Look for an area on their website where they mention how they want portfolios submitted. Some galleries want an email, others a mailed in portfolio.

How much should I invest in masterworks? ›

Masterworks doesn't have specific minimum investment amounts. Minimums vary depending on the specific investment offerings available at the time of investment. However, fractional shares for artwork often starts at just $20 per share, making this an excellent option for investing with little money.

Can I put digital art in my portfolio? ›

Unless otherwise specified, an application portfolio may include drawings, paintings, photography, digital media, design, three-dimensional work, web design, animation, video and almost any other type of artwork.

How can I get rich in art world? ›

Becoming wealthy as an artist will require equal parts artistic talent, marketing knowledge, and business savvy. Artists that treat their art like a business, and are always on the lookout for opportunities, are the one's likely to succeed.

Can I make money selling art? ›

Earning passive income by selling wall art

Painters, illustrators, designers, graphic artists, and even sculptors can earn money by selling high-quality prints or copies of their work.

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How to Sell Art Online and Make Money
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  5. Sell art on Society6 and Redbubble.
  6. Start a Print-on-Demand Business with Amazon.
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Is blue-chip art a good investment? ›

Blue-chip art and the pandemic

Art is a great tangible investment asset as it has the capacity to preserve value and act as a hedge against inflation. Therefore, during times of financial distress, owners of blue-chip artworks usually withhold their most valuable masterpieces to protect their capital.

How can I invest in NFT? ›

How To Invest in NFTs
  1. Open An Account at an NFT Marketplace: An NFT marketplace is an online marketplace where NFTs are listed for sale. ...
  2. Create a Digital Wallet: You'll need to create a digital wallet to store your NFT keys and cryptocurrency tokens.

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12 best investments right now
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  • Exchange-traded funds (ETFs)
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Am I an artist or entrepreneur? ›

If your passion is building processes, growing teams, and selling businesses, you're an entrepreneur. If your passion is the subject of your work — you exist to create a particular kind of product or service — you're an artist.

What type of business is an artist? ›

Most artists operate as sole-proprietors. Eventually, you may want to set yourself up as a different kind of business entity. A sole-proprietorship means that there is one owner and that the income and expenses you incur will directly affect your personal finances.

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Investing in artwork for your company can help you build stronger relationships, boost productivity, and make your office more inviting. When a company sets the tone, it is able to communicate its core values to its employees, customers, and suppliers, resulting in a better overall experience.

Can art be a business? ›

When many people decide to become professional artists, they don't often realize that they are actually starting their own art business. But it's true! You're selling a product (artwork) to people (collectors) who find value in it.

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Art is an opportunity for companies to help clients, visitors and employees get to know and get a feel for who the organisation is. Art in the workplace encourages and promotes social interactions, it stimulates emotional responses and fosters personal relationships.

How much should I sell my art for? ›

Multiply the painting's width by its length to arrive at the total size, in square inches. Then multiply that number by a set dollar amount that's appropriate for your reputation. I currently use $6 per square inch for oil paintings. Then calculate your cost of canvas and framing, and then double that number.

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Where to sell your art online: A standalone ecommerce site using an ecommerce platform like Shopify is a great place to start. Online marketplaces like Etsy, Amazon, or eBay can plug directly into your online store, allowing you to sync sales and reach wider audiences.

How do I invest in blue chip art? ›

One way to own a portion of a blue-chip piece of art is by investing with companies like Masterworks. For a minimum investment of $5,000, you can own a share in a masterwork of art by well-known artists like Warhol, Banksy or Picasso.

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To become an art investor, start by studying and learning about the art that you want to invest in. Then, develop an investment strategy by identifying your long and short-term goals. After you've done that, you can begin to network with artists, gallery owners, and other investors to buy and sell art.

How do I choose an art investor? ›

Yet many people invest in art for the first time without first ensuring that its history, its seller and its value have been verified."
Quick Guidelines for buying art for investment
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Street Art

It traces its origins back to the 1960s and in recent times has become one of the most notable forms of social and political commentary in the art world, appealing to younger millennial collectors in particular.

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The company's findings show that the most popular art styles in 2022 are expected to be abstract (54%), followed by contemporary (48%) and modern (42%) while 48% of designers indicating they anticipate an increase in use of sculpture.

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According to the experts, fine art investing should be around 10% to 20% of your portfolio. So if you have $100,000 to invest, $10,000 should be invested on art by using a platform like Masterworks (easiest method) or buying fine art yourself. Consider it a real estate investment; it's not required.

How can I invest in gold? ›

In general, investors looking to invest in gold directly have three choices: they can purchase the physical asset, they can purchase shares of a mutual or exchange-traded fund (ETF) that replicates the price of gold, or they can trade futures and options in the commodities market.

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NFTs allow art to be sold in a digital form by establishing the secure ownership of an original digital asset, and they can open up access to active new communities of interested buyers. Essentially non-fungible means non-replaceable or one of a kind.

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To boost your art business, check out these nine worthwhile ways to cut galleries out of the equation and make a successful living:
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Good investment ideas have a high probability of success. The level of risk for an investment should also be low. Periodic losses and volatility are a part of investing. With a good investment there should be very little chance of losing the total amount invested.

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Good investment opportunities can often be found in stocks, bonds, mutual funds and real estate. Investments such as cryptocurrency and forex are highly speculative, or high risk, and not necessarily good investments for beginner investors.

Is Masterworks art a good investment? ›

Masterworks is a legitimate alternative investing platform that makes blue-chip artwork more accessible. That said, it's a risky asset class to invest in, and Masterworks doesn't guarantee returns. It doesn't guarantee liquidity either, even with its secondary marketplace.

Is blue-chip art a good investment? ›

Blue-chip art and the pandemic

Art is a great tangible investment asset as it has the capacity to preserve value and act as a hedge against inflation. Therefore, during times of financial distress, owners of blue-chip artworks usually withhold their most valuable masterpieces to protect their capital.

Why is my 401k losing money right now 2022? ›

There are several reasons your 401(k) may be losing money. One reason is that the stock market is simply going through a down period. Another reason your 401(k) may be losing money is that you have invested in a specific company or industry that is not doing well. Finally, your 401(k) may lose money because of fees.

What is good investment for beginners? ›

Short-term investments like high-yield savings accounts or money market mutual funds can help you earn more on your savings while you work towards a big purchase such as a car or a down payment on a house.

How can I be a millionaire? ›

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  2. Avoid Unnecessary Spending and Debt. Stop buying things you don't need. ...
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  6. Get Help if You Need It.

Where do I invest my money? ›

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  1. High-yield savings accounts.
  2. Certificates of deposit (CDs)
  3. Money market funds.
  4. Government bonds.
  5. Corporate bonds.
  6. Mutual funds.
  7. Index funds.
  8. Exchange-traded funds (ETFs)
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What can I buy that will make me money? ›

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How do I withdraw money from my Masterworks? ›

There are two ways you can cash out: when the artwork is sold by Masterworks, or by selling your shares on their secondary market (think the stock market for art). Masterworks aims to hold paintings for three to seven years while they increase in value.

Can anyone invest in Masterworks? ›

With no minimum investment requirement and accessible prices, Masterworks makes it relatively easy for investors to buy shares of contemporary artwork by famous artists like Banksy and Jean-Michel Basquiat.

What are Masterworks fees? ›

The fee structure of Masterworks is similar to that of a hedge fund. Hedge funds charge 2 and 20, which means a 2% annual management fee and 20% of any profits. Masterworks.io charges 1.5 and 20. That equates to a 1.5% annual fee and 20% of profits.

How much does it cost to invest in blue chip art? ›

For a minimum investment of $5,000, you can own a share in a masterwork of art by well-known artists like Warhol, Banksy or Picasso. The company analyzes auction data to find art that is most likely to appreciate over time.

Is art a good investment 2022? ›

Investing in art is a good way to diversify your investment portfolio. However, it's best to invest in this asset if art is something you truly love. That's because art investment can be quite risky and usually requires a lot of research.

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