How To Work With An Art Advisor Or Art Consultant

 Image Courtesy: foter.com

Image Courtesy: foter.com

Collecting art is very personal. Despite the interest in art investment, the use of art as a portfolio diversifier simply does not make sense for most people. Among others, you may not have the budget to buy investment-grade art or the cash to sit out the market cycle of this illiquid asset.

Therefore, particularly when you start to collect, I recommend that you buy what you love. Ultimately you will have to live with your purchase and if you can’t see that happening, you should probably not buy it.

That said, you can certainly be smart about buying art. If you don’t have the expertise yourself, engaging a professional art advisor is a prudent decision to make. Check out the seven ways an art advisor can help you purchase the right piece.

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.

Does Your Legwork

Despite the opacity of the art market, price comparables certainly exist. Databases of public auction records are available online (i.e. artnet.com) and will give you an idea of the value of artworks traded on the secondary market. That said, you probably won’t have the experience and knowledge to analyse the numbers correctly. Listings in price databases don’t provide the underlying reasons for a certain result achieved at auction, such as patchy provenance or condition issues. An art advisor will be able to make sense of the indices and also has access to insider information from galleries and auction houses allowing them to advise you on the appropriate price level for the artwork of your choice.

Helps You Determine Your Taste In Art

The art market can be quite intimidating for novice collectors (I certainly remember my first visit to a London art gallery more than 16 years ago – absolutely terrifying). However the key to collecting in a smart way is to educate yourself by viewing art at galleries, fairs and museums and to read up on the artists you discover. An art advisor will be very helpful in this regard: they will educate you on specific artists, artist movements and the art market. They will get you VIP tickets to art fairs and invitations to gallery openings and studio visits. If you don’t have the time to be involved in buying the artworks yourself, you can certainly let your art advisor choose them for you, as long as you make sure you don’t end up with the same stuff as your neighbours! Your own personal taste is what makes your collection unique.

Gives You Access To Off-Market Opportunities

Many, if not most contemporary galleries operate a waitlist or will sell to their most loyal collectors before offering the works to other buyers. This selectivity makes sense. The gallery is protecting their artists’ market by placing the works in respected collections and reduce the risk of the work being flipped (quickly resold for a profit). The latter is destabilising for an emerging artist’s price levels which is why galleries seek to avoid this scenario at all cost. An art advisor has a strong network of fellow art advisors, galleries and collectors. Chances are that if a particular work becomes available they will know about it which means that you’ll be able to get access to the work before the general public.

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Helps You To Make An Informed Purchase

There is falling in love with an artwork, and then there is the reality that not all artworks are created equal, even within the oeuvre of one artist. An art advisor will let you know which artworks are quality and which are not, all within the parameters of your budget and personal preference. They will also let you know which works are more prone to deterioration than others (think shark, tank and formaldehyde) which will help you to avoid buying a work that will require costly conservation treatments further down the line.

Negotiates A Better Deal For You

It is easy to overpay for an artwork. This is partly due to the asymmetry of information in the art market: the seller almost always knows more about the work than the buyer. An art advisor will prevent you from overpaying. Firstly by doing price research so that you can take an informed decision and secondly by negotiating with galleries to get you a better deal. Galleries usually provide discounts to art advisors. Make sure these are passed on to you. As the market is so opaque, when transacting privately it is not always possible to find out if the party on the other side of the transaction has a financial interest in the work. Therefore it is paramount that your art advisor is completely independent from your counterpart in the transaction so that they can negotiate the best possible deal for you without a conflict of interest.

Bids For You At Auction

Remember I said it’s easy to overpay? That is also because you may fall in love with an artwork so badly that you can’t stop bidding at auction. Engaging an art advisor to represent you at auction is really helpful, they are experienced in bidding and they will not exceed the maximum bid that you have set with them. Even if you prefer to bid yourself, in the excitement of the auction room, as opposed to bidding on the phone or online, it’s helpful to have them sit next to you so that they can whack you over the head with your paddle before you remortgage your home (so to speak).

Arranges Logistics: Viewing, Installation And Shipping

An art advisor takes care of all the logistics from arranging a viewing at the gallery or storage facility to shipping and installation of the work you purchased. These technicalities are boring but important, particularly when you are spending a lot of money. Some art advisors manage their clients’ collections on their behalf. This service saves you a lot of time in terms of administration and logistics and gives you the reassurance that your art is adequately insured.

Convinced?

Now just make sure to choose a really good art advisor. 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.

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.

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.

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.