"The Art of Collecting" podcast - Episode #4: The art of buying art

Laurent Issaurat:  Hello, it's great to have you back in our "The Art of Collecting" podcast series. Each episode looks into a key topic in the ownership and management of artworks and collectibles. For this 4th episode, which will focus on the art of buying art, I’m thrilled to be hosting Viola Raikhel-Bolot, Managing Director and Co-Founder of 1858Ltd Art Advisory.  Hello Viola, welcome back!

Viola Raikhel-Bolot: Hello Laurent, and thank you for having me back, it’s wonderful to be here!

Laurent Issaurat: When we talk about the art market, it is easy to dream of huge capital gains, of discovering masterpieces forgotten at the bottom of an attic... When reading about record prices at auction or stellar trajectories of some young artist, one can be under the impression that in the art world, everyone can try their luck and win. Is this really true, Viola, in your opinion?

Viola Raikhel-Bolot: Well, I certainly have seen some extraordinary stories over the years, and if you’re to believe all the headlines, you know, artworks sell for hundred or ninety million dollars all the time! Like the recent Marylin Monroe⁽¹⁾ that sold at Christie’s in New York. While sell records are broken and they do make headlines, this does not happen every day, and it is unfortunately not the case something bought at the flea market in Paris turns out to be a precious treasure meant for the Louvre. What we do find though is that these headlines bring a lot of excitement to the art world and so they should, because the art world is fueled by passion. And it means that any one can take a chance in the art market and win, potentially. But as a specialist art advisor, one in certainly more conservative and is aware of all the potential risks, also, that accompany those headlines. So my perspective is slightly different. And why, I find it critical to be able to share, with my collectors, the importance of recognizing what they are thinking of buying and what that means to them.

Laurent Issaurat: Interesting Viola, thank you very much. But when it comes to accompanying clients in buying works of art, what are the first steps you would like to follow, typically?

Viola Raikhel-Bolot: Well, all collections start with a very honest conversation with our collectors, really understanding their brief, their vision, where their passions lie… Once we’ve understood that, and their budget, and their appetite for putting this collection together - you might have a collector who wants to buy one work of art a year, conservatively, you may have another one who’s building a museum just to house his or her collection… - so depending on their appetite, we then put together a portfolio based on their specific brief and budget. That portfolio will provide a very comprehensive analysis of each of the artwork, whether it requires scientific reporting, conservation reporting, imagery of the artwork, assuming the client comes to visit the artwork in person – when possible, we want the client to meet the artist, and inspect the artwork and be involved, as closely in the process as possible… Other collectors are happy for us to do this remotely for them… We put together the most authoritative document portfolio about the work or works that they are considering, so that they have all the market intelligence needed to make the right decision for them. Fundamentally, we put the very best objects, artworks in front of them and give them the market intelligence to make the right decision for their collection.

Laurent Issaurat: Interesting. And the art market is quiet broad, complex and not always very transparent. How do you find these works of art? Do you go at auctions, what’s the way you proceed?

Viola Raikhel-Bolot: Another very good question, Laurent, because the art market, as you know, being unregulated⁽²⁾, another interesting fact is that only 45% of the art market is in the public domain: 55% of art market transactions are actually private; 45% of market transactions attract the auction and they are various art market indices and this can be interrogated to investigate and learn more about those art works, and artists and values. But for us it is important to be able to provide our clients access to both the private and public aspects of the market. When looking to source artwork to present to our collectors, we’re privileged to work with private collectors, auction houses, dealers and the artists directly also. When possible, we always bring our collectors front and center to these conversations. We want to make sure that they meet the artist, when possible, meet the upper private collectors, attend the auctions with us if this is something they are willing to do. But we really have access to the full spectrum of sources in the art world and we extend this to our clients directly.

Laurent Issaurat: Good, thank you very much, Viola. But once a client has identified one or several objects they would like to purchase, what are the next steps, what are the due diligences you would help them with?

Viola Raikhel-Bolot:Most definitely, due diligence is one of the most important aspect of the collecting lifecycle, when buying or selling. You know, as they say, the devil is in the details! Due diligence, when making art acquisitions, applies the same discipline as when looking at other acquisitions. For some reason, some collectors, even some of the biggest collectors in the world, assume that the same principles and common sense don’t apply to art as they do their other acquisitions, but in fact they do, and we employ an incredibly due diligence process, because the market is not regulated. We run a very strict provenance check, we work with the art loss register… There are a number of different ways that we ensure that all acquisitions are done safely for our clients, both buying and selling.

Laurent Issaurat: Good, and once one has agreed on an object and a price, is the process finished or are there some other steps one need to go through until the transaction is entirely complete?

Viola Raikhel-Bolot: We work with a number of specialist lawyers who assist us in the contract side, to ensure the handover of title and provenance. There are also – depending on where the artwork is going – a number of logistics concerns that may or may not arise, export documentation, transport, security… So even after the handshake is done, there is still a lot of administrative work and formalities that take place with the transfer of ownership. And then obviously, once it arrives in some new home, we look to assist as best as possible, obviously, with all the hanging, the security… As we do at every stage in the collecting lifecycle.

Laurent Issaurat: Thank you very much Viola for this very valuable insight. As today’s episode is the last one with you, Viola, I would like to thank you very much for your wonderful contribution to this series. See you soon!

Our "The Art of Collecting" series is available on Apple Podcasts and Spotify, via our "#PrivateTalk by Societe Generale Private Banking" program.

⁽¹⁾ In reference to Christie’s sale of a portrait of Marylin Monroe by Andy Warhol (Shot Sage Blue Marylin) at $195 million, in New York on May 10, 2022.

⁽²⁾ There is no body regulating the art market, nor any authority in this area. The market is based on the practices of its players and the unofficial codes governing it (which can change overnight).

The information contained in this audio content is provided for informational purposes only, is subject to change without notice, and is intended to provide information that may be useful in making a decision. Past performance information may be reproduced and is not a guarantee of future performance.

The price and value of investments and the income derived from them may fluctuate, both up and down. Changes in inflation, interest rates and exchange rates may adversely affect the value, price and income of investments denominated in a currency other than that of the investor. Any simulations and examples contained in this publication are provided for illustrative purposes only. This information is subject to change as a result of market fluctuations, and the information and opinions contained in this publication may change. No Societe Generale Private Banking entity undertakes to update or amend this publication, which may become obsolete after being reviewed, and will not assume any responsibility in this regard.

The offers related to the activities and financial and asset information mentioned in this audio content depend on the personal situation of each client, the legislation applicable to him and his tax residence. It is the responsibility of the potential investor to ensure with his legal and tax advisors that he complies with the legal and regulatory provisions of the jurisdiction concerned. This audio content is not intended to be played in the United States, by any U.S. tax resident, or by any person or in any jurisdiction where such playing would be restricted or illegal.

The offers related to the activities and financial and wealth information presented may not be adapted or authorized within all Société Générale Private Banking entities. In addition, access to some of these offers is subject to conditions of eligibility.

Certain offers related to the above-mentioned activities and financial information may present various risks, imply a potential loss of the entire amount invested or even an unlimited potential loss, and therefore be reserved only for a certain category of investors, and/or be suitable only for informed investors who are eligible for these types of offers.

Prior to any subscription to an investment service, a financial product or an insurance product, depending on the case and the applicable legislation, the potential investor will be questioned by his private banker within the Societe Generale Private Banking entity of which he is a client on his knowledge, his experience in investment matters, as well as on his financial situation including his capacity to bear losses, and his investment objectives, including his risk tolerance, in order to determine with him whether he is eligible to subscribe to the financial product(s) and/or investment service(s) envisaged and whether the product(s) or investment service(s) is/are compatible with his investment profile.

The potential investor must also (i) take note of all the information contained in the detailed documentation of the service or product envisaged (document entitled "key information for the investor", prospectus, regulations, articles of association, document entitled "key information for the investor", term sheet, information notice, contractual terms and conditions, etc.), in particular those relating to the associated risks; and (ii) consult its legal and tax advisors to assess the legal consequences and tax treatment of the product or service envisaged. It is reminded that the subscription to an investment service, a financial product or an insurance product may have tax consequences and Société Générale Private Banking does not provide tax advice. His private banker will also be available to provide further information, to determine with him whether he is eligible for the product or service under consideration, which may be subject to conditions, and whether it meets his needs.

Accordingly, no entity under the control of Société Générale Private Banking can be held liable for any decision made by an investor based solely on the information contained in this audio content.

This audio content is confidential, intended exclusively for the person consulting it, and may not be communicated or made known to third parties, nor reproduced in whole or in part, without the prior written consent of the Société Générale Private Banking entity concerned.

Societe Generale Group maintains an effective administrative organization that takes all necessary measures to identify, control and manage conflicts of interest. To this end, Societe Generale Private Banking entities have put in place a conflict of interest management policy to manage and prevent conflicts of interest. For more details, Société Générale Private Banking clients can refer to the Conflict of Interest Policy available on request from their private banker.

Societe Generale Private Banking has also put in place a policy for handling complaints from its clients, which is available on request from their private banker or on the Societe Generale Private Banking website.

SPECIFIC WARNINGS BY JURISDICTION

France: Unless expressly stated otherwise, this document is published and distributed by Société Générale, a French bank authorized and supervised by the Autorité de Contrôle Prudentiel et de Résolution, located at 4, place de Budapest, CS 92459, 75436 Paris Cedex 09, under the prudential supervision of the European Central Bank ("ECB") and registered with the ORIAS as an insurance intermediary under the number 07 022 493 orias.fr Societe Generale is a French société anonyme with a capital of EUR 1 066 714 367,50 as of August 1, 2019, whose registered office is located at 29, boulevard Haussmann, 75009 Paris, and whose unique identification number is 552 120 222 R.C.S. Paris. Further details are available on request or at www.privatebanking.societegenerale.com.

Luxembourg: This document is distributed in Luxembourg by Société Générale Luxembourg, a public limited company registered with the Luxembourg Trade and Companies Register under number B 6061 and a credit institution authorized and regulated by the Commission de Surveillance du Secteur Financier ("CSSF"), under the prudential supervision of the European Central Bank ("ECB"), and whose registered office is located at 11, avenue Emile Reuter - L 2420 Luxembourg Further details are available on request or at www.societegenerale.lu. No investment decision of any kind should be made on the basis of this document alone. Société Générale Luxembourg accepts no responsibility for the accuracy or otherwise of the information contained in this document. Societe Generale Luxembourg accepts no responsibility for any actions taken by the recipient of this document solely on the basis of this document, and Societe Generale Luxembourg does not represent itself as providing any advice, in particular with respect to investment services. The opinions, views and forecasts expressed in this document (including its annexes) reflect the personal opinions of the author(s) and do not reflect the opinions of any other person or of Société Générale Luxembourg, unless otherwise indicated. This document has been prepared by Societe Generale. The CSSF has not carried out any analysis, verification or control on the content of this document.

Monaco: This document is distributed in Monaco by Société Générale Private Banking (Monaco) S.A.M., located at 11 avenue de Grande Bretagne, 98000 Monaco, Principality of Monaco, regulated by the Autorité de Contrôle Prudentiel et de Résolution and the Commission de Contrôle des Activités Financières. Financial products marketed in Monaco may be reserved for qualified investors in accordance with the provisions of Law n° 1.339 of 07/09/2007 and Sovereign Order n° 1. 285 of 10/09/2007. Further details are available on request or at www.privatebanking.societegenerale.com.

Switzerland: This document is distributed in Switzerland by SOCIETE GENERALE Private Banking (Suisse) SA ("SGPBS"), headquartered at rue du Rhône 8, CH-1204 Geneva, Switzerland. SGPBS is a bank authorized by the Swiss Financial Market Supervisory Authority ("FINMA"). Collective investments and structured products may only be offered in accordance with the Swiss Federal Act on Collective Investment Schemes (Collective Investment Schemes Act, CISA) of June 23, 2006, and the Guidelines of the Swiss Bankers Association (SBA) on Information for Investors in Structured Products. Further details are available on request from SGPBS or at www.privatebanking.societegenerale.com.

This document is not distributed by the entities of the Kleinwort Hambros Group that operate under the brand name "Kleinwort Hambros" in the United Kingdom (SG Kleinwort Hambros Bank Limited), Jersey and Guernsey (SG Kleinwort Hambros Bank (CI) Limited) and Gibraltar (SG Kleinwort Hambros Bank (Gibraltar) Limited) Consequently, the information communicated and any offers, activities and financial information presented do not concern these entities and may not be authorized by these entities or adapted in these territories. Further information on the activities of Societe Generale's private banking entities located in the United Kingdom, Channel Islands and Gibraltar, including additional legal and regulatory information, is available at www.kleinworthambros.com.