Questions Potential Art Investors Should Be Asking - An Interview with Anita Heriot of the Fine Art Group

When it comes to art investments, the difference between making a smart move and a costly mistake often boils down to the right kind of knowledge. This is where Anita Heriot and the Fine Art Group come into play.

The Fine Art Group's unique focus is on "non-cash passion assets." They are not just looking at art for its aesthetic appeal, but rather as part of an investment portfolio. They delve deep into the world of 'Art with a big A', navigating the often murky waters of the art industry using their rich experience and contacts.

The Fine Art Group: An Education First Approach

Many art investors dive into this world without adequate knowledge. The Fine Art Group aims to change that. Their focus is on educating clients, this may even include bespoke elements such as introducing clients to auctions, galleries, and private dealers. This is not just about showing them art investments but about teaching them the intricacies of the industry.

The Fine Art Group Client Profile

Most of their clients are individuals, institutions or small syndicates eager to learn more about the art world and art investments, especially those interested in buying B+ grade art or higher. These clients are comfortable with learning to use analytics to make informed buying decisions.

For some, their journey with the Fine Art Group started after they had negative experiences in the art world. These experiences often included unexpected costs, like sales taxes of up to 10% or buyer premiums of 27%.

Anita Heriot explains, “Our role is to bring professionalism, clarity, and structure to an industry that is opaque.”

Key Questions Potential Art Investors should be asking

So, what are the questions potential art investors should be asking? Based on our discussion with Anita, here they are:

1. Are they investable assets? This question probes the value of the artwork as an investment, rather than just as a piece of art.
   
2. Is the investment bucket equally full with these investments? This refers to the opportunity cost elements of the capital you are going to allocate to art, and will this create maximum value.
   
3. Can the investment increase in value over 5 years? A forward-looking perspective is crucial when investing in art, as well as being meticulous and analytical in what you are buying to ensure value.
   
4. Is there a legacy behind your decision? Anita emphasizes the importance of strategizing around legacy. For example, looking at developing cohesive collections that can stand the test of time. Artworks sold as collections often perform better than those from single owner sales. Is there any thought of building a family legacy behind your decision to invest in art?
   
5. Do you have a plan for the collection? Is it registered in your name? Is it in a foundation or LLC? This touches on the legal and strategic aspects of owning a collection.
   
6. Is there a correlation between the cost basis vs. fair market value? Understanding this relationship is essential for determining potential ROI.
   
7. Is your plan rooted in concrete financial information? An art collection should have a sound financial foundation.
   
8. Do you know how to determine an artwork's value? Anita points out a common pitfall: new investors often gravitate toward trending artists. However, investing in prints for example, especially those of B+ quality, can be a smarter move. These prints are made during the artist's lifetime, hand-signed, touched by the artist, and often come in limited editions (25 pieces or fewer). Prints can also be an excellent educational tool for budding investors.

Conclusion

The world of art investing is as complex as it is beautiful. With the right guidance and by asking the right questions, investors can navigate this world more confidently and profitably. With experts like Anita Heriot and the Fine Art Group, you will learn to develop a strong financial and analytical framework when it comes to investing in art.