By Daniel Farrell, consultant,Enservio

Affluent individuals seem to be favoring art as an important“asset class” right now. A Picasso painting recently sold for $106million, a Rothko for $89 million, a Lichtenstein for $43million–and even Warhol prints (not paintings) have sold for upwardof $500,000. Antiques Roadshowregularly turns up artworks and antiques worth hundreds ofthousands of dollars that were inherited from grandparents orbought at yard sales.

Hedge fund managers buy “trophy” art at Sotheby's andChristie's, but perhaps your high net worth clients are not atquite that income level. They're well educated, successful, havegood taste and money in the bank. But they don't really have thetime to research and more fully understand the glamorous, ifmysterious, world of art. And they're especially vulnerableto art purchases if they're on vacation.

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Art fraud, forgery and crimes are rising to unprecedentedlevels. European police officials estimate that as much as 50percent of the art now selling in the marketplace is fake, stolen,altered or illegal to sell.

Here are three real-life examples of how art buyers can getripped off on vacation:

1. The Naïve Navigator

Your high net worth client is on board a luxury cruise shipheading into the Baltic Sea. The champagne is flowing, the art onthe walls is beautifully framed and well lit, and there are anumber of attractive women and elegant men hosting this receptionwho are eager to answer his questions.

The art is for sale–and there's an auction starting right therein another hour. Your customer recognizes the artist names–Picasso, Dali, Chagall. Your client is bold and aggressive inbusiness–why not here? He ends up buying two signed and datedPicasso prints for $20,000 each–less than half of the auctioncompany's “appraised value.”

Once your customer gets home and hangs the art on his officewall, he's happy. His art major daughter tells him they'relegitimate and known Picasso prints—but then she tells him he couldhave bought them for about $8,000 each at the New York art gallerywhere she has been interning.

What can your customer do now? Nothing. There's no law againstoverpaying–or overcharging. The check has cleared and the invoicesays all sales are final.

2. The Trusting Tourist

In another instance, a partner at a law firm tells a story abouthis dream vacation to Italy: driving through the countryside inUmbria and Tuscany, staying in luxurious villas and roaming throughcharming little villages. He and his wife came across a littleantique shop and found a luminous Renaissance-era painting of St.Catherine of Siena. They were told it came from a local church thatwas badly damaged in the prior year's earthquake and the shop owneris selling it on behalf of the church to help pay for repairs. Theshop owner is only asking €15,000–it really should be two or threetimes that much for such a rare painting, he says, but the villageneeds the money and the shop owner will give the full amount fromthe sale to the church.

They arrange to have a wire transfer done and pick up thepainting two days later. Back home, they mention their good fortuneto the director of the local art museum, who is as anxious to seeit as they are to show it to him. Everyone agrees that it isbeautiful, but the museum director has to tell them it's a modernfake, made deliberately to look old and deceive the buyer.

3. The Duped Dentist

And then there's the eminent oral surgeon who recentlyapproached a professional appraiser to get a formal appraisal ofthe Amazon Indian feathered headdress that he bought while onvacation in Brazil. He needed the appraisal to insure the piece,for which he paid $10,000.

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The appraiser told him that he can't do an appraisal for him.The headdress contains feathers from a scarlet macaw, a bird on theendangered species list and protected under the Migratory Bird Actof 1918. It was actually illegal for him to have imported theheaddress and it's now illegal for him to possess it. He can'tlegally sell it or re-export it. It can't be appraised because itsonly value would be a “black market” value and the appraiser can'tethically research or cite such a value.

Tips for agents

Whether your high net worth customer is new to collecting oralready the owner of many works of fine art and collectibles,working with an art advisor can help him or her avoid some commonbut costly mistakes. An art advisor takes the guesswork outof the purchase, and can simplify the entire collectingexperience. Generally, they will have a strong knowledge ofart and art history, as well as the current marketplace, where artvalues can be quite volatile.

Advisors know the current marketplace and can negotiate on yourcustomer's behalf. They can educate them about the process,and make the experience simple and rewarding. Advisors alsomake sure the buyer has the appropriate documentation and knows theappropriate factors regarding provenance, quality and historicalvalue, both for new purchases and ones they already own.

Suggesting to your client that bringing an art advisor into theequation before they buy can avoid some very costlymistakes. The advisor can coach the client in collectionmanagement, as well as insure that appraisals for their currentitems are kept up to date.

Choosing the best art advisor for your clients?

• Always opt for an advisor who is certified by a nationalappraisal association, such as the Appraisers Assn. of America(AAA), American Society ofAppraisers (ASA), International Society ofAppraisers (ISA), or have experience in the major auctionhouses.
• Communication between you and your advisor is key, so makesure you choose someone you are comfortable with, as well ashaving mutual trust and respect.
• If you have a particular period or style in mind for yourcollection, choosing an advisor with specialties that matchthe era is also beneficial.