A few years ago, I was having a casual conversation at a party with an art-collecting hedge fund manager—a thoughtful guy who engaged seriously with the art world, and happened to work with an advisor whom I found abrasive. Our host, who is even more blunt than I am—can you imagine?—made a comment about the advisor’s challenging personality and inquired, “Why do you work with that person?” Unperturbed, the collector responded that, while he was fully aware of the advisor’s limitations, he needed someone who did a lot of business with the Zwirners, Hausers, and Gagosians of the world to get him to the head of the line. Indeed, he was acknowledging a central truth of this part of the business: Access is the currency of the primary market. By zealously developing that access, art advisors have been able to generate value for themselves and for the galleries. (Who do you think keeps collectors from going rogue and flipping in-demand works? The advisors, who need to protect their gallery relationships.) After all, a good advisor can make a great deal of money working for only a few committed clients who transact at the top of the market—they get paid, at least in part, based on the volume of their transactions. And like the family-office industry, which has grown up to service the needs and whims of the ultra-wealthy, art advisors have emerged to handle the unique challenges of navigating an individual’s entrée into collecting or managing ever-larger collections. But for a number of reasons—from competition over deals that often discourages transparency and cooperation, to the conflicts of interest that would inevitably arise within more expansive firms—there have been no market forces incentivizing independent advisors to band together to create a large-scale advisory firm that would mirror the consolidation of the auction and gallery businesses. As a result, a mega advisory has yet to emerge. That’s not to say firms aren’t growing. Sandy Heller, perhaps the premier art advisor of his time, has added as partners Jean-Olivier Després in Paris and Etsuko Nakajima in Tokyo. Jussi Pylkkänen recently opened his own advisory firm. When Wentworth Beaumont and Hugo Nathan joined forces in 2014, their goal was to build a best-in-class organization that was more than a lifestyle business for themselves and could bring a level of professionalism to art advising, which often seems more like a cottage industry. To a degree, they’ve succeeded, but it has taken them a decade to build trust with both clients and dealers. And in order to grow, they’ve had to train their own talent. Earlier this week, when I spoke to the team at Beaumont Nathan about the promotion of three longtime employees to equity partners, it seemed like a good time to ask the possibly awkward, but unavoidable, question: Why haven’t we seen the emergence of a large global advisory firm to match those global galleries and auction houses? After all, the art industry behaves like any other: There is a value chain as an object goes from creator to consumer, and the expansion of any one link should have a ripple effect, thereby enhancing the others. Why has the art advisor business been immune?

The first real attempt to build a large-scale advisory business took place in 2016, at Sotheby’s, when the auction house paid $85 million to acquire Art Agency, Partners. The deal was essentially an acquihire of the firm’s three partners, with Sotheby’s installing Amy Cappellazzo as head of the fine art division, giving Adam Chinn the role of chief operating officer, and leaving Allan Schwartzman to run the AAP team inside the corporation. It seemed like a natural expansion of what an auction house ought to provide its clients—Sotheby’s seemed to be morphing into an analog of the big Wall Street banks, with a trading floor (the auction room), an investment bank providing liquidity options (Sotheby’s Financial Services), and, now, a private bank offering advisory services (AAP). But for AAP to grow, it needed to build a roster of younger advisors who could benefit from Schwartzman’s reputation and visibility to eventually establish their own client bases. Strategically, at least, that sounds easy enough, but it’s very hard to put into practice. Personalities don’t always align, and short-term priorities can get in the way of long-term growth. In the end, Sotheby’s just didn’t have a deep enough management bench to figure out a way to build AAP. By the time Patrick Drahi bought the company in 2019, the art advisory business didn’t fit with Drahi’s vision of Sotheby’s as a luxury retailer burnished by the auction house’s reputation. Soon after the change in ownership, Schwartzman left. In my conversations with the folks at Beaumont Nathan, the partners all felt strongly that their ability to grow beyond the founders—60 percent of the deals are now done by advisors who don’t have their names on the door—was a combination of information-sharing across the firm and a conscious program of mentorship. In other words: good management. The Beaumont Nathan leadership team recognized that growth depended on developing more advisors, rather than trying to hire advisors from outside, or ex-auction house personnel with a similar skill set. (As those who have worked inside auction houses and galleries have noted, information-sharing is rare among people who stand to earn commissions from sales.) The other challenge to scaling an advisory business relates to how advisors are compensated: typically via retainer, a commission on sales, or a flat fee for a particular project. Smart clients (or smart advisors) prefer a hybrid model that combines a retainer with commissions—keeping them close but also incentivizing them in success. Some have suggested that a smarter model would provide different commission rates for, say, finding a buyer for a work (which really adds value), and, say, managing a relationship with an auction house. And of course, there’s also a commission on the buy side, which doesn’t necessarily align the client’s interest with the advisor’s. That’s only the beginning of the potential conflicts inherent in the advisory business. If you think a big advisory firm makes sense because of its greater reach—more clients means more market insight, including who has which works in their collection—you have to manage who is representing whose interests if you want to act as a brokerage. (The big appraisal firms keep their appraisers, brokers, and art advisors siloed.) There are also some advisory firms that buy and hold art that they believe clients will want someday. Do they disclose to the eventual buyer, if it is a client of theirs, that the work comes from their own holdings? They should. To cover the overhead costs of a sufficiently large advisory firm, one has to have enough clients willing to pay a retainer. This actually argues for advisory firms to be part of larger entities, like auction houses, because they can carry the overhead and allow the advisors to focus on their work. Unfortunately, a very successful advisor will quickly want to strike out on their own to keep more of the upside. It’s a fissiparous business, this advising thing.

On my way out the door, I just wanted to say that Sotheby’s has announced that they will be partnering with Roman and Williams on the restaurant in the basement of the Breuer building on Madison Avenue, which they say will open this autumn. The chef and concept are still to be determined. I’ll be in Los Angeles next week for Frieze. As always, if you see me, please say hello. Talk soon, M