The news hit the art world like a bombshell. One of the most prominent art advisers in the business, Lisa Schiff, had been targeted by two explosive lawsuits brought by former clients — one also a close friend. The lawsuits accused Schiff of breach of contract, fraud and conspiracy, alleging that in her role as adviser she bilked clients out of millions of dollars on art deals.

Among her clients was film star Leonardo DiCaprio, although that relationship apparently ended five years ago. But Schiff had also brokered deals with multiple clients for works by artists such as Wangechi Mutu, Sarah Lucas and Chloe Wise.

The allegations — brought by her (now presumably former) friend, real-estate heir Candace Barasch, and lawyer Richard Grossman — charge that Schiff owes them $1.8mn over a painting by the Cluj school artist Adrian Ghenie. She allegedly bought the work on their behalf but never remitted the full profit when it was resold. A second lawsuit claims she advised clients to buy art and took payment for it but never passed those payments on to the galleries. She has started liquidating her business, according to court documents; she and her lawyer John Cahill did not respond to a request for comment on the cases.

Unfortunately, this is by no means the first time art advisers have been involved in problems with their clients. But it provides a good moment to survey the risks of the trade — and work out how to find an adviser you can trust.

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© Katy Lemay

In 2015, one of Germany’s leading advisers, Helge Achenbach, went to prison after admitting defrauding clients out of at least €18mn. Among his super-wealthy clients were the late Aldi supermarket heir Berthold Albrecht and pharmaceutical entrepreneur Christian Boehringer. In court Achenbach admitted he had added additional mark-ups to art bought for his clients.

More recently, adviser Angela Gulbenkian pleaded guilty in a London courtroom to defrauding a client over the sale of a £1.1mn Yayoi Kusama sculpture.

“It’s a total Wild West out there,” says Harry Smith, chair of the London and New York advisory company Gurr Johns. “Due to the opacity of the art market, the client may well not know the true price of the work of art they are advised to buy. The opportunity to lose money is greater in the art world than in virtually any other field except perhaps horseracing.”

Yet many collectors do use advisers, both to scan all that’s available — they can travel around the world to biennales, fairs and exhibitions when often the client is too busy to do so — and to gain access to the most coveted artworks. An adviser will also help with conservation, storage, insurance and inventorying, as well as helping the client focus on how to shape the collection; they can resell for the client, though this brings risks of a conflict of interest.

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© Katy Lemay

Finding a reliable, trustworthy and reputable adviser is the problem. In the trade, people talk cuttingly about “Gmail art advisers”, well-connected but inexperienced newbies who set up shop with just an email account and no proper structure behind them. “Do your due diligence, don’t use an attractive young person you just met at a cocktail party or your spouse’s best friend,” advises Smith. Recommendations tend to be word of mouth, but you can always check their reputation with your contacts at a gallery, auction house or museum.

“Before appointing someone, speak to collectors you trust, dealers you trust,” says the established dealer and adviser Emily Tsingou. “You should not be focusing on someone who just analyses price data. And you need to know what you want, you need to find an art adviser who is not putting together collections that are similar to each other.”

So how much does it cost? It depends on the negotiation between client and adviser, and can vary from a percentage fee per transaction to a yearly retainer. This can hinge on the amount the collector wants to devote to art — in general the higher the sum, the lower the percentage. On transactions between £20,000 to £1mn it might be 10 per cent; less for higher prices. A retainer varies on how much work the adviser does, but could be in the range of £25,000 to £75,000 per year. A hybrid solution might be a retainer plus a small commission, perhaps 5 per cent, on purchases.

“Working with great consultants who look after a few clients can be very rewarding and save a lot of time,” says Toby Clarke of Vigo Gallery. “A major problem from the dealers’ point of view is advisers who flip. For instance, recently an adviser [who also owned a gallery] from New York begged me to sell him a Jordy Kerwick work, saying it was for a New York doctor. So I did, and then lo and behold it appeared six weeks later in a South Korean auction selling at three times the price. This doesn’t help to trust new advisers.”

The problem is that there is no qualification to become an adviser. In the US, there is the Association of Professional Art Advisors, with a code of ethics and stringent entry requirements. However, few countries have such an association, so it is up to the client to spot red flags when seeking an adviser. “Stay away from anyone promising great returns,” advises Clark, while Smith emphasises: “Check the reputation of the person: quite a few so-called advisers don’t last very long — they go off the rails.” Recent history, sadly, seems to bear this out.

This article has been revised since original publication

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