Four months ago, an investment advisor from a family office approached us to consult us on a collection of contemporary art that her clients had assembled with the help of an art advisor. The majority of the works were made by artists with a reputation for conservation, who have dominated the market for the past decade and have seen their prices rise steadily. Yet after a recent appraisal, customers were surprised to learn that many pieces were worth much less than they paid for, even though their art advisor had led them to believe the works would increase in value.
Unfortunately, the collection was largely made up of minor works which are much less in demand than others by the same artists. In fact, two of the pieces had already been bought at auction, a fact the advisor had not pointed out.
In another case, a collector was referred to my art council by his lawyer for advice on selling a dozen works of art valued at around $ 50 million from his collection of significant Modernist paintings. Two years ago, another advisor valued one of his paintings at around $ 2.5 million and then negotiated its sale to a dealer. Nine months later, the dealer sold the same painting at auction for $ 8.4 million.
By the time I got there these collectors wanted to talk to anyone But someone with the title of “artistic advisor”. Unfortunately, such stories have become more common over the past decade as advisers have risen to prominence in the art market, attracting too many potential players with too little business experience or too little business experience. ethics to fulfill the role.
In the 20+ years that have passed since the founding of my practice, I have seen the range of services offered by art advisors expand from a narrow focus on curatorial advice to creation. from private museums, to estate planning, liaising with a client’s financial and legal teams, and implementing sophisticated systems for the physical storage and digital cataloging of collections.
We have been adopted not only by more and more collectors, but also by dealers, auction houses and museum professionals as essential colleagues, even if we remain in the shadows. At the same time, expectations of professionalism in the industry have become even more codified by art lawyers and the Association of Professional Art Advisors, the only standards-setting association for the consulting industry across the board. world, which I currently lead as president.
Sadly, however, over the same period the number of people claiming the title with little more than a well-designed website touting a wave of good faith has increased to the same extent. While some professions in the art world, such as law, require specialized degrees and opening a gallery requires a commitment of significant financial resources, no license, training or investment is required to hang a gallery. shingle as artistic advisor.
Today, people operating under the guise of art advisers range from scholarly experts working independently after long careers in large organizations, to recent graduates looking to find a place in the art world, to law firms. advice promising obscure new models for investing in fractional art. Particularly over the past year, as more and more relationships in the art world have moved to the virtual realm, the work of distinguishing between the trustworthy and the disreputable has become vital.
The last two UBS Art Basel Market Reports, as well as The Independent New York Art Market Report, show that art advisors have a significant impact on the art ecosystem. Independent reported that 30% of New York collectors surveyed in 2020 have worked with an art advisor at some point, and 6% have worked with advisors for their entire collection. This group was mostly wealthy individuals, 71% with wealth over $ 1 million (26% were ultra-HNWIs, with wealth over $ 50 million). For the record, gallery owners report that more and more sales are made each year through art advisers.
Ask the right questions
The growing role of the artistic advisor can have either a negative or positive impact. When art advisors lack experience or work unethically, it breeds distrust in the market. But the reverse can also be true: experienced, efficient and ethical art advisers have a positive impact not only on the collections they build, but on the market as a whole. A collector who is considering starting a relationship with an art advisor should therefore think about several questions before embarking on what can be one of the most rewarding or daunting relationships of their collector career.
What is the training and level of experience of the advisor?
Advisors come from many backgrounds. In fact, as a rule, advisers benefit from experience and have developed contacts in more than one area of the art world, from galleries and auction houses to museums and universities. Curators, for example, bring in-depth knowledge of art history, but would benefit from some direct involvement in the market before becoming an advisor.
What is their area of expertise?
Advisors and assessors should not give advice outside of their specific area of expertise. Collectors will want to work with an advisor who has a deep understanding of their area of interest and who has the experience and connections to facilitate finding and accessing the right works of art to help build a collection of quality and distinction. sustainable. Sometimes we’ll work with curators or other advisors with expertise beyond our own to help a client with a new area of interest and give them the trusted advice they need to make informed decisions. These relationships expand, rather than restrict, our practice.
How are transactions carried out and what fee structure do they use?
Fees for artistic advisors may be based on fees, commissions on sales and purchases, hourly rates for services, or a combination of these. Collectors with large collections, for example, who actively acquire works each year and require extensive collection management services, might prefer to work with their advisor on a fee basis, while collectors who rely on advisers. to help them find, control and strategically advise on acquisitions may decide that a commission on individual transactions is more appropriate. While any form of compensation is acceptable, the most important factor is that an advisor’s fees are clearly defined in a contract or engagement agreement and that all the facts of any transaction are fully transparent.
Do they own inventory or are they affiliated with a gallery, auction house, or dealer?
The APAA and I advocate independent advisors who work solely in the best interests of their clients and do not have conflicting priorities. While good relationships with other actors are essential, external partnerships can muddy the waters.
What range of services do they offer?
Beyond advice on acquisitions and sales facilitation, many advisers organize transport, installation, conservation consultation, storage and management of collections, and work with financial advisers or family offices on the long-term planning of their clients. Collectors may need some or all of these services to support their collection, and understanding an advisor’s experience and relationships in related fields will help them find the right fit.
Are they members of APAA or another professional association?
The APAA, Appraisers Association of America, and Art Dealers Association of America are professional organizations that carefully screen applicants for membership based on their experience, expertise, and reputation; they also set expectations for professional conduct based on their codes of ethics. APAA members have a minimum of five years of experience as professional artistic advisors and considerable careers prior to establishing their practices. We do not keep an inventory and we must conduct transactions for our clients with clarity and transparency, and avoid any situation that may conflict with the interests of our clients.
Advancing the profession
While these questions will help the individual client find their best match, it is clear that bigger steps are needed to accelerate the professionalization of art consulting.
In my fourth year as APAA President, I realize that the time has come to take a proactive approach to championing our profession. To that end, in the coming months, APAA will launch a series of webinars for collectors, dealers, auction houses, art fairs, museum professionals, lawyers and financial advisors to keep them in the know what they can expect from qualified and independent staff. artistic advisers. We will develop a separate series for advisors and those aspiring to this position to further formalize and communicate best practices in the field.
For 40 years the APAA has provided a proven standard of excellence for the industry, but we now realize that we need to promote this standard more widely. Even though the profession has become more complex, our common thread remains the same: the collector-advisor relationship can be eminently rewarding, provided you choose the right partner.
Megan Fox Kelly is the founder of Megan Fox Kelly Art Advisory and is currently President of the Association of Professional Art Advisors. She is also the host of “Reading the Art World with Megan Fox Kelly”, a new series of interviews with authors of books on art.
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