With all the career possibilities globally, relatively few people consider their job to be “art collector.” We’ll discuss what it means to be an art collector as a primary mode of compensation versus other related titles such as art dealers, art buyers, art appraisers, and others. Is art collecting a hobby?
More than a hobby, you’ll find few occupations as enjoyable and rewarding. If you’re interested in art collecting for economic benefit, now might be a great time to get started as well.
Mitt Romney, who made his money in a hedge fund before political life, recently suggested that fine art is a great investment because it’s a hedge against inflation and has little correlation with the stock market.
If you’re considering starting an art collection, be sure to take a look at our art collectors guide.
A Day in the Life of an Art Collector
There are worse things than waking up each day to focus on fine art, but concentrated work is required to be successful.
At its core, art collecting as a job means buying low and selling high. Just like other types of investors, you have to develop a sense of what art will go up in value over time, be positioned with capital and connections to purchase those works, and then be willing to part with them at some future date. So what are art collectors up to on a daily basis?
- Art collectors have to be sure that their existing holdings are being properly maintained so that they don’t lose value. Unlike owning stock, which requires about as much maintenance as having a bank account, owning fine art requires thoughtful preservation. Pieces have to be maintained in climate-controlled rooms, be secured from theft or damage by viewers, and insured against acts of god such as fires or earthquakes. A collection of value requires serious art collecting tools to ensure that all works are accounted for at all times.
- Art collectors who own collectible artists often need to share these works with the world. Works of art that are shown at famous galleries or museums tend to appreciate faster than works that stay in one place. Thus, art collectors must spend time maintaining their networks and arranging for their pieces to circulate and ideally generate press.
- Art collectors need to find new works to purchase with appreciation potential. This may mean networking with up-and-coming artists and purchasing directly or through galleries. It may also mean networking with other collectors who may be looking to liquidate certain holdings for various reasons.
- To make a living, art collectors need to make sales periodically to take profit from their investments. This includes selling to other collectors, institutions, and museums directly or via intermediaries such as art buyers, art dealers, and auction houses.
For someone thinking about being an art collector as a job, a strong entrepreneurial spirit is a must. There is no formula to follow nor boss to tell you what to do when. You’ll need to have strong research and communication skills as well as be adept at selling, or be prepared to pay broker fees to others who can help you facilitate sales.
Required Education for Being an Art Collector
Like other entrepreneurial endeavors, there is no one hiring art collectors or reviewing resumes to double-check for specific classes, degrees, or certifications.
A working knowledge of art history and an appreciation for art technique can certainly be helpful in developing a taste for pieces that have appreciation potential. Beyond that, a willingness to spend lots of time researching is a must.
Similarly to purchasing real estate, buying well has a huge correlation with future profitability. For any purchase, an art collector must “comp” the piece to be purchased against other recent sales to try to understand what a reasonable purchase price may be. Sales of other pieces by that artist, other contemporaries of that artist, other sales at top auction houses or galleries, and other data are worth reviewing before making an offer on a piece to be purchased.
A great place to get an education on the art world that isn’t taught in any university is through the writing of Don Thompson. Start with The $12 Million Stuff Shark to get an understanding of how art economics work.
Other skills that will be valuable to any art collector seeking to make it a vocation include negotiation and sales skills. There are plenty of books on business negotiations that are applicable. If you have a fear of making offers, you can also practice face to face at antique stores and other resellers or online at marketplaces like eBay or Craigslist. You don’t want a fear of negotiation price to be a deterrent to your success.
Job Duties for an Art Collector
If you want to be an art collector full-time, your duties will fall into three categories: purchase, maintain, and sell.
Since your goal will always be to sell each work of art for more than you purchased it, you’ll have to be sure you don’t buy at inflated prices. You’ll want to be sure you do your research, understanding what comparable pieces are for sale and for how much plus any recent actual sales and for how much those went. It’s easier to determine sale prices for pieces that sell at auction. For other pieces, you’ll hopefully develop a network of art industry professionals that can help determine prices for recent comparable works changing hands.
Like any investment, you’ll need to hold your purchases for a period of time so that they can appreciate in value. Hopefully, you’ll also be displaying your purchases, which is a lot of the fun for both hobbyist and professional art collectors. You’ll need to be sure you have a gallery or storage facility that is climate-controlled, free from insects, has modern fire prevention tools, and keeps your works away from damaging sunlight. Transportation, in particular, can be a dangerous task as well. If you will be loaning pieces to build their value, you’ll want to be sure they are crated correctly and moved by competent contractors.
So you bought at a good price or maybe even negotiated a deal and then maintained some fantastic artwork that has appreciated in value? Now it’s time to sell and lock in your profits. This is when you get to pay yourself out of your art collecting business to cover personal expenses. You’ll also want to replenish your principal so that you can make your next purchases.
Selling at a good price also requires tapping into your network. If you are not personally adept at marketing and negotiating a sale, you’ll need to work with others. You have many options including listing work for sale on a platform like ETChster, working with an art dealer, or if your pieces have become particularly desirable, you may be able to enlist the services of one of the great auction houses such as Sotheby’s or Christie’s. Keep in mind that intermediaries will want their commissions, and sometimes those can be substantial.
Of course, there are all kinds of day-to-day activities that will keep you active in the three categories mentioned above. You’ll need to have an administrative plan in place so that you can accurately understand your profits, pay your taxes, cover your expenses, etc. Unlike a job working for someone else, you are all departments of the business until you hire someone to take one of those away.
The Average Annual Compensation for an Art Collector
Finding statistics about commoditized jobs is much simpler. There is a wealth of information on hourly, weekly, monthly, and annual compensation for factory jobs, government jobs, or even specialized jobs such as lawyers or software developers.
Because being an art collector is relatively rare and is much more entrepreneurial, there isn’t an easy way to access compensation tables. An art collector may pay themselves a nominal salary from a holding company they control, but that is not their true annual compensation. Like other entrepreneurs, art collector compensation varies greatly from year to year.
What’s easier to come by are estimates of overall net worth. Charles Saatchi, who first made a fortune in advertising, had an estimated net worth of $165 million back in 2009 according to Forbes. The profit on particular works of art such as the shark art work mentioned above are also easier to find. Forbes had him buying the shark for $84,000 and later selling it to Steven Cohen for $13 million. In The Art of Being Charles Saatchi, an artist who he collected for a time named Sean Scully criticized his collecting practices as follows: “It’s incorrect to call it a collection. It is correct to call it a stock.”
For art collectors who treat it as their primary profession, the compensation aspect is probably better thought of in similar terms to that of a stock trader than a salary. Peter Lynch, one of the most famous stock investors of all time, once said: “You only need a few good stocks in your lifetime. I mean how many times do you need a stock to go up ten-fold to make a lot of money? Not a lot.” Hirst’s shark was way more than a 10-bagger for Charles Saatchi and when thinking about compensation for art collectors, the number of huge wins is probably a much better way to judge their financial success rather than trying to come up with an average annual compensation.
Difference Between an Art Dealer and an Art Collector
So we’ve talked about art collectors and the business side of collecting art. Art collectors are solely focused on buying and selling in their own name. They don’t provide that service to 3rd parties such as wealthy individual or corporate art collections.
On the other hand, art dealers will represent art for sale without first buying it. They may take possession of works of art as well so that they can physically display or bring it to potential purchasers to examine.
So think of this type of business as very similar to a real estate agent. They work to get art listings, then market it for the current owner, and get paid they sell it. Much like galleries and auction houses, the commission on the sale of fine art is quite high.
Art dealers is constantly looking for new clients who own expensive art and need help selling it. They sign an agreement that establishes their compensation and then when a purchase is completed, they get paid at the closing.
Whereas an art collector’s profit is the difference between the original purchase price and the new sales price, the art dealer’s compensation is only their commission on the new sales price.
Average Annual Art Dealer Salary
“Art dealer salary” is a little of a misleading concept because of the way they are compensated. Art dealers are incorporated companies in most cases because they deal in high-dollar transactions, work internationally, need tax-advantageous legal structures, and have high liability when they represent others in multi-million dollar transactions.
The “dealer” is usually the CEO and “face” of the company and you could say they have an art dealer salary, but in general, the lion’s share of their compensation comes from profit draws. They are the rainmaker in the company. They provide relational selling to convince new art collectors to use their services.
When a new piece of art is signed for representation, they employ photographers and marketers to put together a marketing package and get the listing publicized to attract interest. They may also have a database of potential buyers who will receive an email or phone call when an interesting piece becomes available.
With buyers, they convince the buyer to trust that the price they are quoting is justified and that the provenance and authenticity of the piece are solid.
The rest of the art dealer company are typically administrative, marketing, and communications professionals. Their salaries and total compensation are similar to the same roles in any other type of company.
So art dealers, like other CEOS, can make a lot of money if they are successful. Their art dealer salary may be quite low in comparison to their total compensation, similar to that of CEOs of publicly traded companies.
Hopefully, you have a better understanding of how to think about compensation for art collectors. Like other investible assets, sometimes their value immediately goes up substantially, and sometimes it takes quite a bit longer. When that happens and an art collector sells at a substantial profit, they receive the benefit of the “paper gains” over the hold period. So what does that mean for someone just getting started with art collecting?
You may not have any cash compensation during your first few years because it won’t make sense to sell anything yet. You’ll be buying out of capital obtained through other means with a long-term vision that some of your purchases will go up in value substantially. While you can think about buying fine art as an investment, there is no “day trader” opportunity. Works don’t change hands that often and appreciation happens over a period of years.
In summary, your compensation as art collector like any other type of entrepreneurial endeavor can be significantly higher than any salaried job that you might get, but you won’t receive the compensation level until you achieve significant success.