We have been told by a local piano dealer that SOME advanced intructors will require that the student play on a American Steinway. We are currently looking for a 6'-7' grand (We do like Steinway pianos, especially the B, however we have been impressed by other German piano's - Bluethner & August Forster)
I would like to know if this is true for any instuctors - Please comment.
Don't go to those advanced teachers.

It is possible that the piano dealer wants you to buy one of the most expensive piano brands, though hopefully this is unlikely.
ALWAYS ALWAYS ALWAYS go for a piano that you like, rather than a brand. Though on the whole Steinway makes good pianos, when it comes down to the minutiae, they will have inferior pianos. This goes for all other reputable companies.
It is possible that these advanced instructors have been brainwashed by marketing e.g. Rachmaninov used it, Horowitz used it, and also because they are familiar with the tone of Steinway pianos, as they appear to be in many concert halls. It is also possible that they have a Steinway themselves.
Also for my personal experience with Steinways, I intensely dislike the sound of the bass notes, particularly when it is unpedaled. However, the power you can achieve with a Steinway D can swamp an orchestra, given that you are Vladimir Horowitz.
