Art advisors (sometimes referred to as art consultants) can be really helpful to collectors trying to navigate the art market. They educate you on art and guide you as you build your collection. They help you avoid buying artworks with problems (i.e. title, authenticity or condition) and they give you access to off-market opportunities.
The Association of Professional Art Advisors asks from its members that they abide by the organization’s Code of Ethics, and their website is a great resource to find out more about art advisory. That said, there are no industry-wide standards or regulations that govern how art advisors and art consultants work with their clients.
So you need to make sure to do your due diligence before you hire them. Below we share three questions that you should ask, at minimum. Any art advisor worth their salt will have no problem answering these questions honestly and disclosing the information you need to know. And remember, we are not lawyers, so nothing we say in this post or anywhere else on our blog should be taken as legal advice.
1 How Much And How Do You Charge?
Most art advisors charge a commission (between 10% and 20% of the value of the work), a flat fee or a combination of both. More and more art advisors these days charge upfront deposits or retainers, in the same way that lawyers do. This is understandable: they have to cover the substantial amount of legwork they do on your behalf before the actual transaction takes place.
Your art advisor should be completely transparent to you on how much they make out of transactions they advise you on. In other words, if you pay them a commission to advise you on the purchase of a painting, you need to know if they are also receiving an introductory commission (ie. if you buy the painting at a gallery). Ideally they’d pass on the discount to you but at the very least they should divulge it so that you can decide if you are comfortable with that.
2 Do You Have A Conflict Of Interest In This Transaction?
If an art advisor you want to hire also advises the party on the other side of a transaction, for example in a private sale, there is clearly a conflict of interest. They should disclose this conflict to you so that you have an opportunity to decide whether this works for you. Some collectors are fine with it, particularly if they are well-versed in the art market and if they know and trust the advisor and the other party to the transaction. But if you’re not, you should have the option of getting a second opinion or working with another advisor all-together.
Similarly, if you have a relationship with a gallery owner who also works as an art advisor, make sure you are both clear on the terms of your collaboration. When a gallery owner sells you a work out of their gallery, they usually receive around 50% of the retail value of the work as they share the sales profit with the artist. When they are operating as an art advisor, however, they are supposed to be giving independent advice about artworks that they do not have a financial stake in because that would be a conflict of interest. In other words, they shouldn’t provide you with and charge you for art advisory services on works they sell you out of their gallery.
3 Do You Work With Contracts?
Way back when it was common for collectors, art advisors and dealers to operate on a handshake basis. In this day and age that’s just not smart. Yes, the relationship you have with your art advisor is based on trust, in the same way that you relate to your wealth manager, your doctor or your lawyer. You wouldn’t work with them otherwise. That said, documenting a working relationship in a contract is better for you and your advisor as it helps to avoid misunderstanding.
A professional art advisor will have a standard agreement in which the nature of your relationship is outlined in detail, including for example, the length of your engagement. Artworks can take a long time to sell, so you want to give your advisor some time to do that, but it’s also completely acceptable to put a time cap on this, i.e. six or 12 months. Other items that should be covered in the agreement are the exact remuneration, when and how this should be paid and who takes care of expenses such as shipments, insurance and research costs.
This is not an exhaustive list of what should be covered in a contract so the best thing to do, particularly for high value transactions and transactions that span multiple jurisdictions, is to engage a lawyer who is well-versed in drafting and reviewing art contracts. If you'd like to learn more about managing relationships in the art market, click here.