According to Deloitte’s Art and Finance Report (2016) ‘there is a consensus among different stakeholders (collectors, art professionals, lawyers, and wealth managers) when it comes to issues that constitute a real threat to the reputation and functioning of the art market’. The report goes on to state that it is well-known that a lack of transparency facilitates price manipulation, conflicts of interest and undisclosed commissions. Sadly, this is a true statement.
After all, an uninformed buyer is easier to cheat than an insider. This is exactly where an art advisor should come in. Like intermediaries in other markets, art advisors have a deeper understanding of and better access to opportunities in the market. Therefore, as an art advisor you should be completely unbiased and have no financial stake in the art that you are advising your client on. As an art advisor you are your client’s fiduciary.
There are many highly trustworthy art dealers and advisors operating in the market today. Unfortunately, a few rotten apples always spoil the barrel. A market as opaque and unregulated as the art market simply attracts those who are looking to make a quick buck but a lack of regulation does not make it ok to cheat your clients out of money. Moreover, it is not a smart business decision. One lawsuit by a duped client can easily ruin the best of reputations.
The increased focus on art as an asset class makes today’s collectors more discerning than ever before and they increasingly expect their art advisors to operate in a highly professional manner. If you want to have a long, successful career as an art advisor, you should embrace these four principles: no conflicts of interest, no kick-backs, transparency on pricing and absolute independence.