Conflicts of Interest in Art Advisory: How to Spot Them

The most common is dual compensation: an advisor paid by the collector who also receives a commission, rebate or introduction fee from the gallery or seller. The collector believes they are buying independent judgement; the advisor's income depends partly on the transaction completing.

The second is the advisor who deals. Where an advisor also holds inventory, any recommendation to buy their own stock is a sale, and the interest is direct.

The third is quieter and harder to see: dependence on a small number of galleries for access. An advisor whose practice relies on a handful of relationships has a structural incentive not to place their clients in conflict with those galleries, which can shape advice without any payment changing hands.

• Commission or rebate from the seller alongside the client's fee
• Advisor holding inventory they may recommend
• Financial interest in an artist's market
• Access dependence on a narrow set of galleries
• Valuation work for a client whose collection the advisor also sells from

These are reasonable questions, professionally asked and professionally answered. An advisor who is offended by them has answered the most important one.

Put them in writing and ask for the answers in writing. A verbal assurance and a written one are different instruments if a dispute ever arises.

A flat retainer aligns most cleanly: the advisor is paid for judgement over a period and earns the same whether or not a purchase happens, which makes recommending against a work costless.

A percentage of acquisitions is common and understandable, and it does mean the advisor earns nothing if the correct answer for a year is to buy nothing. That is a real tension, not a disqualification, and it is managed by acknowledging it.

Hourly or project fees suit defined pieces of work — a collection review, a valuation exercise, a single acquisition. Whatever the structure, the test is whether it is written down, fully disclosed and the only compensation the advisor receives in connection with the work.

The advisory agreement should state the fee, state that no other compensation will be received in connection with the client's transactions without written disclosure and consent, and set out what happens if the advisor is offered any.

That one clause resolves most of this. Advisors who work this way generally propose it themselves, which is a useful signal in the other direction.