7/27/2019 Art + Auction: CONVERSATION WITH - Michael Plummer and Jeff Rabin (July 2013)

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CONVERSATIONWITH

Michael Plummer and Jeff RabinCapitalizing on both their nancial expertise and their art-world savvy,Michael Plummer, former chief operating ofcer of Christies nancialservices, and Jeff Rabin, former V.P. of the same division, went out ontheir own in to form Artvest, an investment advisory practice thatspecializes in helping clients build wealth through their collections.We talked to the pair about the benetsand pitfallsof art investing.

power and a liquid market

where prices are set openly

and transparently.

Artvest facilitates loans

for borrowers who wish to

use their art as collateral.

When should a client

consider this?

Securing a loan is ideal for

those who want to maintain

ownership of artworks that

have a low cost basis, as

capital gains taxes would be

significant if a work were

sold to raise money. On

another level, many clients

like to put their money to

work, as the saying goes.

So if they are able to qualify

for a 3.5 percent loan

through their private bankand then are able to turn

that money around and

invest in their own business

or another opportunity

where they are likely to

make a much greater return,

it just makes good

business sense.

How does your auction

house background inform

your business today?

As global auction sales make

up approximately 50 percent

of the market, it is critical

to understand what can and

cannot be done in that arena

versus the private market.

There are many situations in

which the auction market

may be preferable to selling

privately, and there are times

that a client is much better

served outside the auction

space. Also, having the type

of senior level auction expe-

rience that we have gives

us a leg up when negotiating

with the auction houses on

behalf or our c lients to get

the best financial terms andmost advantageous market-

ing arrangements.

How do you feel about

people flipping art?

The idea of owning a great

work of art is a privilege,

and we see the current owner

as a temporary steward,

before the object moves to

a new caretaker. On the other

hand, there are times when

either by design or accident,

a collector, dealer, or investor

sees an opportunity to realize

a significant return and takes

it. On an individual basis,

this is understandable. When

many are doing it at the

same time, however, it creates

bubbles that are unsustain-

able. This happened in the

contemporary market in200708, and in the Chinese

art market in 201011.

Do you see any new

or unusual trends in the

art market?

Yes, and it is a good bit

different from the common

perception. While the

contemporary market has

been relatively hot over

the last two years, across

all sectors and globally,

the art market cooled in

2012, and we expect it to

remain cool in 2013. The

exponential growth that the

art market experienced

from 2003 through 2011 is

unlikely to be repeated in

the next decade, and we are

starting to see competit ion

intensify amongst all of

the existing entitiesdealers,

auction houses, andadvisersjust to maintain

the level of business

that they have enjoyed in

the previous period.

What do you see for art

investment going forward?

Its hard to say. One of

the reasons the art market

has been favored by

investors over the last two

years is because financial

markets have been unstable

and posting poor returns.

At least in the U.S., that

changed in the first half of

2013. If this trend continues

and the economy begins

to grow again, there will be

more competition for

capital. On the other hand,

we feel that in certain sectors

and with certain artists,there will always be solid

investment opportunities.

ART+AUCTION AUCTION HOUSE ISSUE 2013 | BLOUINARTINFO.COM

Whats the most common

miscalculation investors

make when choosing a

work as an investment?

Diversification is critical, or

at the very least avoiding

a high concentration in a

single artist. Purely from the

perspective of financial risk,

it is important that an artist

has already made it to the

secondary market and has

had works sold at auction.

Broadly speaking, it is only

after an artist has made that

leap that he or she has a

proven commercial staying

Artvest

cofoundersMichael Plummer(left) andJeff Rabin. M

ICHAEL

PL

UMMER

AND

JEFF

RABIN,

ARTVEST

PARTNERS

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