Sarah D. McDaniel never imagined she would have a career in the art world. Raised outside of Philadelphia, she grew up frequenting the area’s many museums and developed a special fondness for the Barnes Foundation, where she learned the names of artists and styles, and cemented her love of art. art with its encapsulated stories.
But she always assumed that her interest in art would remain a hobby. As an undergraduate at Dartmouth College, McDaniel was on a pre-medical path with ambitions to become a doctor. This began to change when an academic advisor recommended that McDaniel enroll in an art history course to meet one of his general education requirements. “When the lights went out and the images appeared larger than life on the screen, the surge of excitement I felt in the Barnes came back to me,” McDaniel recalled. “I became an art history major, in addition to studying pre-med.”
It wasn’t until McDaniel was able to travel the world, see and study art through a Semester at Sea program that she decided to give up medicine as a career. Instead, after graduating, she went to work for Christie’s, first in New York and then in London. “It was like working in a museum whose collection came back twice a year,” says McDaniel. “I liked it.”
McDaniel’s time at Christie’s exposed her not just to art, but to the business of art – how to buy and sell it, why, and how to plan its acquisition. Her experience working in the auction house’s Trusts, Taxes, Estates and Valuations department would prove invaluable in her transition into finance and wealth management as she would learn how art management as an asset is essential for preserving collections and legacies or finding new homes for works. in future collections.
Eventually, McDaniel enrolled in the London Business School MBA program to study business and finance. This would eventually lead her to Morgan Stanley, where McDaniel works to help clients integrate art as an asset on their balance sheet and raise awareness of it potentially becoming an unforeseen future liability.
Over the course of his more than 30 year career, McDaniel has seen the art market change dramatically. On the one hand, she says, the profile of the collector has grown. “You see more collectors, with more diverse backgrounds and experiences. This has naturally transformed the economy of taste within the art market, as different collectors bring in new interests.
The ability to determine the value of a collection has also become more accessible, in part thanks to a range of new digital tools that have brought more efficiency and pricing transparency to an industry that once operated solely on handshake and silent transactions.
“I used to look up auction prices in old auction catalogs,” she says. “Now people can query prices in online art databases. This makes it easier to find the market value of a piece and start to think of art and collectibles as a assets, as well as a passional asset.
As the art market continues to evolve, so does the need for comprehensive financial planning and asset management for collectors, says McDaniel.
Unlike art advisors, who can help individual clients connect with galleries and identify individual pieces to build a collection, McDaniel and his colleagues at Morgan Stanley focus on the financial opportunities and challenges that can arise from owning an art collection. These may include the need for trusts, tax and estate planning, family governance, philanthropic planning, insurance and access to finance to help manage storage and maintenance costs.
Estate planning is one area where a long-term strategy can help art collectors deal with unexpected complications. For example, works that appeal to the collector may not appeal to the next generation, and heirs may not know how to maintain the art. Moreover, different works may not be enjoyed in the same way, leaving some heirs with a windfall and others feeling cheated.
For McDaniel, Morgan Stanley is an ideal place to help clients navigate such challenges, with the goal of balancing their passion for fundraising with their broader financial planning needs.
“We can discuss possible strategies for collectors and their collections to complement their portfolios, balance sheets, risk profiles and personal circumstances,” she says. “Being able to review these issues with the many specialist teams at Morgan Stanley is very rewarding. I learn something new and interesting every day about art, finance and their interconnectivity.