Catching up on my Memorial Day/Pentecost weekend reading, I came across an upbeat-on-the-art-market New York Times piece, The Art of Buying Art, With the Help of an Adviser. It’s pretty pro-adviser, explaining all the various services the right one can provide. Including making you tons of money, as witnessed by the article’s kicker quote: “[Advisor Stacey Winston-Levitan] recalled a phone call a few months ago from one of her clients who wanted to thank her for her advice to buy a John Baldessari piece for $20,000 in the early 1990s. The client had just been offered $500,000 for it. ‘As an art adviser,’ she said, ‘those are the calls you love to get.’”
Slotted in the NYT Business section (not the culture pages), with the section head “Spending,” this piece was classic “service journalism,” i.e. intended to help the reader in dealing with their lives, finances, etc. Which is why it seemed a little weird to see how quickly it skimmed over one of the potentially thorniest issues in the collector/consultant relationship: Compensation. As the Times informs us, “Consultants can charge by the hour, by the project or on a retainer basis. They may also charge a percentage of the price of the art they help acquire.” But as I noted in this month’s Art Newspaper article “The problem with art advisors,” this can be filled with unexpected implications for the novice collector that the Times piece targets:
At its cleanest, [compensation] is straightforward: the collector pays a retainer, usually based upon the ambition level of the projected collection and the speed with which it’s supposed to be completed. Much more frequently, the consultant is paid a commission on each sale by the gallery. To the extent that there’s an industry standard, it’s 10 percent. But in reality, that’s just a baseline number. “With some of my artists, like Josephine Meckseper, where demand is high, the price is the price—if they want a commission, a consultant needs to work it out with their client,” says dealer Elizabeth Dee of New York. “With other artists, I can be more flexible. But you never want to give them more than 10 percent , even though many consultants come asking for 15 percent or even 20 percent.”
… The problem with fluctuating commissions goes beyond the dealer’s profit margin: it also means that advisors have a financial incentive to deal more with one gallery than another, which can skew their clients’ collections toward the artists of the galleries from whom the advisor reaps the best rewards. “I’m very blunt with consultants—I tell them that I want to build a long relationship with them, and that commissions start when we do our fifth or sixth deal,” says Ed Winkleman. “But I know with some consultants that if there’s no commission, they’re not coming back.”
The trickiest issue by far with commissions is “double-dipping”—when a consultants collects a commission from both dealer and collector. Technically speaking, there’s nothing wrong with this. After all, auction houses get a cut from both buyers and consignors. But when it comes to consulting, the client is too often left in the dark.
On a broader note, my article’s list of the potential issues posed when advisers get involved drew a heated email from my friend Lisa Schiff, a Manhattan-based adviser. She felt I’d been unfair thrice, 1) in highlighting the problems attributed to the major influx of advisers into the market, 2) without giving them enough credit for what they do well, while 3) portraying galleries as the victims of this influx, rather than its beneficiaries. With Schiff’s permission, here’s a section of that email.
I think there is a fear and need among dealers to control the collectors directly. Do you ever think that some collectors don’t want to play the game of, “Buy this and you can have that; buy two, and give one to a museum”? They don’t want to parade their collections at art fairs and have their names everywhere. They don’t actually want people to know how much money they spend on art, etc. They just love living with it. Is that such a crime?
And by the way, [collectors] have a lot of other endeavors, jobs, children, live in different cities – you think you can just show up and build a collection in your spare time? They need help. And in the end, I let them choose. I just inform them of what they are buying – and if I think they can get something better, I put it in front of them. But it’s their creation in the end. That’s the point – to help collectors build something that is about them, not about me.
As I responded to Lisa, and as the article makes clear, there’s a dizzyingly broad spectrum of activity that falls under the terms “art consultants” and “art adviser.” Just as there’s wide range of activity among art critics (some of whom also consult collectors). So, to be clear, I certainly don’t dismiss wholesale the notion of collectors getting advice in assembling their collections. Because when it’s done right, and when the advisers are sensitive to all the issues raised by the people I cite in my article, the situation can be win-win-win. But the fact is that it’s an art-market menage-a-trois, often with major money on the line – so setting the rules upfront and considering the pitfalls remains essential.
P.S. Lisa and I are still very much on speaking terms, following my offer to buy the next round of drinks, which she will either sip serenely or dump on my head. Watch the Venice and Basel party reports for the denouement.