Does Anyone Care About YOUR Money As Much As YOU Do?

Here in the PoP household, we care about our money. Perhaps even to a slightly excessive level.

20130725-190625.jpg

Really former renter?  You thought THIS would be considered a move-in ready paint job?

As a result, we are pretty DIY about most things. We replace our fluorescent lighting, build vertical gardens, and even go as far as managing our own rental properties, which meant we recently got to spend a weekend refinishing linoleum floors and another doing some repainting.

But are we missing something? Surely if this many people continue to pay for travel agents, property managers, and other asset managers – there must be a value add, right?

In general, I like to think that there are travel agents, property managers, and wealth advisors that do provide a value for their service. (Call me optimistic, but I just think if EVERYONE saw no value in these services they would presumably cease to exist as there’d be no market for them.)

But a few recent interactions have reminded me that even relationships that start out as value-add can spin out of your control if you don’t watch out.

 

Travel Agent

A little over a year ago, a friend of mine planned a multi-itinerary trip to Europe. Not wanting to limit his travel flexibility for flight changes, etc, he ended up using his company’s corporate travel agent (though he footed the $2,500 travel bill himself) under the belief that the service the agent would provide was well worth the slightly higher cost of the trip.

At first, he was right. My friend got sick right before his trip and ended up unable to go. The travel agent was able to arrange a 1-year credit for the cost of his tickets. But then funny things kept happening. He was unable to use the credit on certain flights, which took the travel agent time to resolve. Then the travel agent told him the expiration for domestic flights was earlier and he was ineligible.

Eventually he took matters into his own hands and called the airline’s customer service himself. It took a few calls (he thought 3 calls of about 30 minutes each) in which customer service agents initially contradicted themselves and gave information that indicated his credit should have been valid when he attempted to use it. As a result, the airline caved. (Rare, I know!)

With some additional paperwork to prove that his reason for canceling the flight initially (seriously, he needed a doctor’s note – like he was back in school!), my friend got his credit reissued and his deadline extended another year. He’s already booking his trip!

Yes, it took him time. About 90 minutes on the phone and a few more to send some faxes. But to him, it was absolutely worth it. $2,500 for 1.5 hours of work? No brainer.

His travel agent on the other hand didn’t think it was worth it. She already had her fee (from the original booking). Whether or not my friend got his credit didn’t affect what she was getting paid, so when she got the initial notifications that the credit expired, she didn’t pursue it any further. Case closed.

My friend’s exact words: “I should have just done it myself from the beginning. It would have been much less hassle.”

 

Property Managers

My friend (the one I wrote about here) recently moved away, and is now renting a lovely single family home in their new city which is managed by a property manager. When my friend moved in to this new home, there were actually a couple of small plumbing problems that they told the property manager about.

“Not a problem. I’ll call a plumber out for you ASAP.”

So who showed up the next day? The property manager’s son, a handyman. (Who it should be noted was nice and polite, though it seemed not entirely confident in his work.)

Now, if that property manager had been looking out for the homeowner’s wallet, he would have called the best value handyman/plumber in the area. Considering it’s a major metropolis that my friend moved to, my friend highly doubted that the best value handyman/plumber in the entire metro area just happens to be living in the property manager’s garage apartment.

 

In a similar vein, a home nearby ours was recently foreclosed and all the posted foreclosure notices list the property management contact at the bank as Barb Barnacle (name made up, but quite unique). So whose name ends up on the real estate sign in the front yard a few weeks later? Well, not Barb, but Gene Barnacle! Quick google searches show a strong family resemblance between Barb and Gene which isn’t surprising given the uniqueness of their surname.

And while Gene might be a perfectly competent realtor to sell the property, is he really the best? Are the shareholders of the bank missing out on potential profit (or at this point due to foreclosure – loss avoidance) due to Barb playing favorites and picking a relative as a realtor?

 

Their Interests Not Yours

Both the travel agent and the property managers have one thing in common. They are looking out for their interests above those of the owner of the asset they are managing.

  • The travel agent valued her time above getting my client his money back.
  • The rental property manager valued helping out his son more than ensuring the property owner got the best valued service.
  • And Barb Barnacle valued helping a relative get a commission more than making sure the shareholders of the local bank had the best representatives for that asset sale as she could find.

These actions probably aren’t illegal, nor do they really stretch the boundaries of ethics all that far. Travel agents and property managers probably don’t have a fiduciary responsibility to you the way that a wealth manager would. (Typically “best efforts” is the contractual requirement.) But, without question, common actions like these will eat into the value of the asset over time (quickly for my friend’s expiring travel credit, but more slowly for the property managers), costing the asset owner money over time.

In the end, what it seems to come down to is…
No One Cares More About YOUR Money Than You

I don’t think this means hiring asset managers can never be justified, I think it just means you need to go into each one of those situations with your eyes wide open.

 

What assets do you feel comfortable handing off to managers? Property? Travel or Vacation Funds? Retirement Funds? Why?

34 comments to Does Anyone Care About YOUR Money As Much As YOU Do?

  • There are so many conflicts of interest out there when you really start to look for it. That’s why I, like you guys, try to handle everything myself. I’ve used apartment hunting agencies before. It seems all innocent because you don’t pay them at all. They get their fee from the apartment complexes that want residents. Their incentives are not exactly aligned with mine…
    CashRebel recently posted..It’s Time To Figure Out What’s NextMy Profile

    • Similar to the apartment search agencies are headhunters, who have given me a slightly queasy feeling when I’ve worked with them.

  • While we all need help with certain things, I’ve almost always found that when I put the effort in to do something myself, it’s easier than I thought it would be and I can typically do it well. It’s mostly just fear and/or laziness that causes us to hire someone else most of the time. Even with something like migrating my blog to self-hosting, I was tempted to just pay someone to help. But I sucked it up and did it myself, and while there were certainly a couple of headaches, it all turned out fine and I learned much more by doing it.
    Matt Becker recently posted..The Key to Your Investment SuccessMy Profile

    • I think you’re probably right that the list of things that are “easier to do than previously assumed” is much longer than the list of “much harder than it sounded” items.

  • I don’t like sellers on commission in general because one they have sold you something they have no interest in providing good support, unless that is recurring business. But for a one shot the guy can disappear and leave you hanging. I am working with an engineer now to draw maps of my land and he doesn’t care at all but he only saw 50% of the money up front so I still have some bargaining power.
    Pauline recently posted..How to start a website step 1: Name, domain and hostingMy Profile

    • I think the half upfront half upon delivery is a good plan when it comes to hiring bidded services. You want them a bit motivated to get the project done to your satisfaction.

      Though I think we’re probably a bit more understanding of commission salespeople than most since that’s how Mr. PoP earns a living. But he provides ongoing support (or rather his company does) for everything he sells and their big revenues are recurring sales. So they’re not going to leave you in a lurch.

  • Great points, Mrs. PoP. I just read an article not too long ago in which a certain politician’s husband’s real estate company got ALL of the listings of buildings that the government owned and were selling off. No conflict of interest there. :-)
    Laurie @thefrugalfarmer recently posted..How to Help Others When You’re on a Tight BudgetMy Profile

    • Wowser! Would love to read the article if you’ve got the link somewhere!

    • Travis

      Laurie & Mrs PoP, it is California Sen. Dianne Feinstein and her husband, Richard Blum.

      http://www.washingtontimes.com/news/2013/jun/12/firm-chaired-by-sen-feinsteins-husband-cashes-in-o/?page=all

      http://www.snopes.com/politics/business/blum.asp

      Blum is an owner of CBRE Group, which got the exclusive contract to sell several post offices. But they say it “involved no political influence.” Uh huh. Sure. And that wasn’t the only deal Blum got:

      “In late 2008, the real estate firm then-known as CB Richard Ellis won a contract from FDIC to sell off properties the government inherited during the mortgage crisis at generous commission rates that ran as high as 8 percent to 30 percent.”

      “But the 2012 inspector general’s report also divulged just how handsomely CB Richard Ellis and its chairman of the board were rewarded: the firm between 2009 and 2011 collected a whopping $108,319,000 in fees and compensation under the deal, the report showed.”

  • I have to agree that no one cares about your own money more than you do. Everyone is always looking out for themselves. I like to manage my own things as well, and if I ever purchased a rental I’d like to think I would handle issues personally. I try to outsource as little as possible. You get a chance to learn things firsthand and become more self-sufficient by doing so, which is invaluable in the end.
    E.M. recently posted..DIY: Cutting the Boyfriend’s HairMy Profile

  • I am totally my own travel agent. Whenever I contact one to see if they can find me a deal I can always find one better than the one they find me!
    Mo’ Money Mo’ Houses recently posted..5 More Things I’m Thankful For…My Profile

    • Ironically we’ve had corporate travel agents screw up work travel a couple different times and been a bit of an inconvenience. Would have been easier to book ourselves!

  • Sure they care about your money. About getting it!
    Pat S recently posted..Your Finances, On AutopilotMy Profile

  • No one really does care about our money than we do. I personally do things as long as I can and even with grocery shopping and planning of events, I do them all personally for it saves me a lot of I do most of the decision making in spending my money.
    Alexis Marlons recently posted..Help with Setting up a BusinessMy Profile

  • Lara

    I think your point is mostly true, but there are times when outsourcing makes sense. One is if the job requires a skill level higher than you possess – I think you mentioned earlier that you hire someone to help with taxes.

    The other time is when your life is just too hectic to competently deal with anything else. My husband and I bought some rental property shortly after we were married and did all the work ourselves. It was profitable and we enjoyed working on it together. Five years later dynamics had changed a little. My husband’s job was more stressful and he was traveling a lot. I was caring for an infant and a toddler. A couple of our grandparents were doing poorly and we felt the need to spend time with them. As you might imagine, the rental property was not being well managed and we were growing to hate the place. After running some numbers, we decided to just sell, but a property manager was something we seriously considered.

  • You’re definitely right – I don’t think it’s an all or nothing thing at all. Just something to make sure to remind ourselves of, especially when considering handing the reins over to someone else like you did with your property. Just out of curiosity – was it mistrusting potential property managers that made you decide to sell or cost? Or something else entirely?

    • Lara

      It was a combination of factors. The rental property was still profitable once the manager’s fee was paid, but not by much. I think the deciding factor was how much difficulty we had getting the two property management offices that we did trust to return our calls.

  • I like the challenge of being able to work everything out on my own. It makes the rewards that much sweeter because I did it on my own. It also removes any excuses if things go badly because it was all on me as well. I’ll contract out needs only if there are legal repercussions for not knowing what you are doing. :)
    Micro recently posted..Sometimes, it takes a work aroundMy Profile

  • Certainly all unique situations but are they really. I’ve travelled all over the world and I’ve never used a travel agent for that reason. I did all the homework myself and I can’t say that I’ve had a bad trip at all. I don’t own any homes that need property managers but when we go to sell our home we’ll be selling it on our own and paying ourselves the thousands of dollars commission instead of a realtor.
    canadianbudgetbinder recently posted..PF Weekly Grab a brew #30 : Handling a product concern responsiblyMy Profile

  • When my wife and I travel, we always take care of all the arrangements. That way we can only blame ourselves if something goes wrong, like when I famously locked my car keys in the car at the airport before leaving on our trip to Mexico.
    Terry @ Fix em Up Rent em Out recently posted..Getting Rid of Bad TenantsMy Profile

  • I absolutely think you’re right: no one cares about your money the way you do. As CashRebel noted, there’s just a conflict of interest involved with our typical financial transaction.

    Ironically I think a close relationship with your supplier (e.g. – a close friend or even a relative) might get you the kind of service you’re hoping for. The drive to keep an ongoing and healthy relationship might push them to go the extra mile and to take care of your interests.
    Done by Forty recently posted..Thirty More Days, Thirty Fewer ThingsMy Profile

  • I still work with a financial planner because it’s someone my dad used and my dad is way more savvy about it then I am. It’s something that I feel like I should take more control over, but then again I’ve been using him for quite some time and I haven’t had any problems. Could I be making more? Perhaps. Other than that I’m not really trusting when it comes to my money. I sit back and really think about the pros and cons before handing off my money for someone else to manage.
    Budget and the Beach recently posted..Link Love/Week in Review 7/26/13My Profile

  • I definitely think travel agents are antiquated in terms of outsourcing considering all the online options out there. I suppose it makes sense for older generations who might not be as internet-savvy, but I don’t see younger generations going to them.
    anna recently posted..Liebster AwardMy Profile

  • Couldn’t agree more. I don’t hand anything off that I can do myself. This includes managing my money. I’ve had more people screw things up, especially when it comes to construction. Grrrrrrrrrrr…

  • Not to be a downer, but everybody is self absorbed. Of course nobody cares about your money as much as you do, because they are busy caring about their own money. As much as I like outsourcing, it’s hard to strike a balance and trust others.
    Daisy @ Young Finances recently posted..How to Buy a House in the Cayman IslandsMy Profile

  • Anything I can do myself I do myself. It’s not that I don’t trust other people (well sometimes I don’t), but if I can control something I like to have the control. For the things that I can’t do myself or don’t have the expertise, I prefer to get a referral from a friend or family member. Nobody cares about your (or your money) more than you.
    KK @ Student Debt Survivor recently posted..Lazy Girl’s Dinner – Easy, Nutritious & CheapMy Profile

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  • This is the exact reason that I do not use a financial advisor. I was shocked the other day when I spoke to a very intelligent person about how they take commission on what they advise and therefore look after their pocket before their customers and this person had not even thought that through.
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