Q&A: Wealth-X’s Auction Expert
As the former vice president of marketing for Sotheby’s, Lynn Raynault developed and implemented the marketing and branding strategies for all of the storied house’s auctions in North America. Now the vice president of global marketing for Wealth-X, a leading international research firm providing intelligence on ultrahigh-net-worth individuals, she brings her rich experience across multiple asset categories to bear in identifying trends in the fast-paced marketplace. She shares some of her most recent observations with Robb Report.
Robb Report: The sale of Pablo Picasso’s Les Femmes d’Alger this past spring was one of the most significant events yet in the art world, setting a new record for the highest price ever paid ($180 million) for a painting at auction. How does a sale like this affect the global art marketplace?
Lynn Raynault: The global art market is on the rise and, in 2014, hit a record high of about 51 billion euros. These record-breaking numbers at the very top end of the market create a halo effect across the entire industry. More and more people want to either grow their collections or even just start one. Most significantly, we see a huge move in the digital marketplace, with giants like eBay partnering up with global powerhouse Sotheby’s and selling across a very broad range of the market—from entry-level price points up to the very top end.
RR: Have there been other, equally significant moments for other categories, such as jewelry, watches, wine, and classic automobiles?
LR: Each collecting category generally has one big moment each year: Either a rare book or a stamp comes up that breaks market records. In jewelry, a rare diamond will come on the market; in the watch category, for example, we saw the sale of Henry Graves’s Supercomplication last year at Sotheby’s for nearly $25 million. In the automobile category, in Monterey in August, the top 25 cars across all auctions sold for between $2.5 million and $17 million.
RR: Although some collections, such as Steve Wynn’s, are highly publicized, many others are held very discreetly. What are some of the challenges to tracking the collector market—gauging the size and importance of particular collections?
LR: The folks who can afford significant collections most often keep their collections as discreet as they do other aspects of their lives. It is common to see more phone bidding than in-person bidding in the auction room, especially with fine art. Gallery owners and dealers are adept at keeping sales private and protecting the identity of their clients. This does make tracking collections and valuing a collection difficult. At Wealth-X, we are able to narrow down the possibilities of who may have purchased a certain item based on what we know of a person’s liquidity [ability to purchase at a certain level], along with past behaviors and preferences for art or other collectibles.
RR: Are there regional differences that you see in terms of what collectors acquire and why?
LR: Ultrahigh-net-worth individuals [those with over $30 million in net assets] live a very global lifestyle. While collecting choices may once have been influenced by local culture, auctions and private sales across categories are becoming more and more diverse in terms of buyers. However, there are still local preferences. For example, in Asia the important art includes ceramics and calligraphy, whereas in Europe and the United States there has been an enormous growth in the contemporary art market.
RR: What are the global economic trends likely to affect the high-end collectors’ market over the next 5 years?
LR: While it feels like a record is hit every season, we have not seen the top of the market. The ultra-wealthy population will grow about 20 percent over the next 5 years. We will also start to see the beginning of the biggest transfer of wealth in history from one generation to another, and with it will come changing preferences in terms of collections and assets. Many collections will be sold, bringing to market pieces that have not been around for a long time, and there will be an appetite from the next generation for their own collections.
RR: What do you anticipate for the global auction markets in the coming years? Even during the recession, the markets for many of these categories expanded. Will they continue to do so?
LR: The auction markets certainly felt a hit back in 2008, but since then, they have been growing at a faster rate than ever before. Every house is turning to the digital marketplace and developing e-commerce strategies. As they do so, they need to understand how to connect with and cultivate new collectors without the key-client, hands-on relationship they have counted on historically. When they get this right, they most certainly will continue to expand, reaching new collectors and new markets.
RR: What can you tell us about the next generation of high-net-worth individuals? How will their behaviors as collectors and consumers differ from those of previous generations?
LR: Both Christie’s and Sotheby’s are making big strategic shifts to target the next generation of collectors. The digital marketplace is changing the dynamic between the traditional collector and the specialist. There has been a tremendous amount of content produced to tell the stories and educate a larger audience in the same way a specialist may have done historically. There is also a push to bring new collectors in to see the collections firsthand. New sales with trendy themes are popping up, crossing collecting categories to be more relevant to a younger audience.