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