A client of mine was recently bemoaning his fate. It seems that he had just had a service on his expensive car that had set him back a considerable sum and considered the cost “outrageous”.
In his ranting he compared the hourly rate charged by the brand mechanics to those charged by the local garage mechanic, which, he said, was more than double.
Of course, he wouldn’t let the local mechanic “within 50 feet of his car”, which was an admission that the chap wasn’t qualified to work on the car, but, at the same time, my client was not prepared to acknowledge the value of the expertise of the brand mechanics, or such things as correct quality parts and guarantee of work, etc.
I think we all will accept that we get what we pay for, and I am sure we have all, at some time, bought cheap and lived to regret it, but often we still cut corners and pay the price!
Expertise is valuable
My client said not only was the hourly rate more expensive, he believed the garage took too many hours to do a “simple service”. So what did he get for his ‘extra’ cost? It’s often the things you can’t see that cost the most.
Comparing the hourly cost or the number of hours is overlooking what we are really buying. It’s not the hours taken, it’s the end result that is important. We must consider what has been done in those hours, how well it has been done and whether we can trust what we can’t see.
We are talking about the cost of expertise.
For example, how long does it take to train a top class mechanic? How stringent are the management processes? It takes time to develop and maintain expertise and we have to be prepared to acknowledge this in searching for the service that we want and to get the best job done by the best people – the experts.
Many years ago, I used a consultant to help me restructure some business processes. Capital was not readily available so I needed to dig deep to pay for the service and it was a hard decision to spend the money. The process was quite painful in itself, calling for some changes in my actions and even my beliefs, but over the following few years I recovered the cost of the consultancy many times over and built a much stronger business than would have been possible otherwise. The expert was actually a ‘no-cost’ extremely powerful asset that provided invaluable results.
Making the correct choice
Of course, just because it’s expensive it doesn’t mean it’s the best, so we have to make our choices carefully. Choosing a financial consultant in the UK for example has become more difficult following new rules introduced early this year.
Parts of those rules have changed the way that consultants can charge for their services, moving to an hourly rate basis. The result is that now clients will often make a decision on how much per hour a consultant will charge rather than the service being provided – in other words almost being encouraged to overlook the value of expertise!
Thankfully, here in Portugal we can still choose our advice based on the information we can gather before we commit to any charge. We are able, therefore, to make our decisions according to the expertise of the people we trust – after we have determined that expertise and trust.
Just like mechanics, getting our finances right will include much work that we cannot see, and have retrospective results that could be very painful if done badly. We must, therefore, make our choices carefully and base them on proven expertise and not just price alone.
We must consider such things as security and protection, the independence to be able to choose from the widest range of products and the expertise to understand those products, together with ensuring compliancy with tax and other fiscal regulations.
In short, we can decide if we are prepared to risk our long term security, our future income and our continued wellbeing, or get an expert to help us remove those risks.
Expertise will rightly come with a cost – but in financial planning terms, that cost will most often be far outweighed by the value.
This facility is not suitable for all expatriates, and we recommend that advice is sought before one makes any commitment.
By William Offen
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William Offen is Blacktower Financial Management (International) Country Manager, Portugal. Blacktower is an Independent Financial Adviser.
289 355 685
