ServiceSnitch.comServiceSnitch.com:Consumer Reports and Service Buying Guides: Price, Fee and Cost Information2006-12-29T23:07:55ZCopyright (c) 2006, adminExpressionEnginetag:servicesnitch.com,2006:12:29Storage Facilities: Your Loss Is Their Gaintag:servicesnitch.com,2006:index.php/site/index/1.282006-12-29T22:53:00Z2006-12-29T23:07:55Zadminpegr.technical@gmail.com What It Costs:
Storage facilities charge you by the month, and your rate will cover the space, utilities (such as lighting), and insurance. If you opt for a space with special amenities, like climate control, this will raise the rate. Even more so than with other services, your bottom line will also depend on what part of the country you live in. Because demand for space is much higher in the cities, urban storage facilities will charge much more than their suburban and rural counterparts. Even within the same city, however, the rates will vary widely; a facility in the safe part of town will command much higher fees than its competitor across the tracks. Ultimately, of course, the most important consideration is just how much space you want. $30 a month may get you enough space to stack a few boxes, but that same facility may also rent out spaces twice the size of your apartment for $3,000 a month; the storage industry caters not only to individual customers but to corporate clients, too, and corporations generally have both more to store and more money at their disposal than consumers do.
The Storage Manager Says:
"I know how important my clients' possessions are to them, and my staff and I will make sure that any item you leave with my facility is stored safely and securely. We will always keep an eye out for anything that may threaten the condition of your property, but should the unthinkable happen and your goods are damaged and stolen, you will be covered by the insurance policy included in your monthly fee. Above all, we provide our customers with the best service in the industry, and all for a fair, equitable cost."
The Snitch Says:
"Storage managers will always tell you the same thing, but the only thing most of them ever intend to keep an eye on is your wallet. With thousands of clients to serve in a sprawling mega-facility, no storage manager is going to care about you or your property, shut away in some distant, mold-ravaged, roach-infested corner of the warehouse, especially since he has corporate clients to satisfy. After all, you're just some piddly little consumer netting his outfit "only" $50 a month, what does he care? All he's doing is renting out air…and making a killing on it.
While hidden costs are not the sole preserve of the storage industry, they are the one thing facility managers have safely under lock and key. A classic ploy of the unscrupulous facility manager is to bait you with the offer of a free driver before you sign on, then blindside you with unannounced labor fees and extortionate overages once your security deposit is in his pocket. The storage facility manager may charge you labor fees whenever you move something in or out, even something you can carry yourself, or he may levy a charge for every access you make to locker, even if it's just to check up on your belongings, because, after all, no one else will.
Although basic insurance is included in your storage contract, the standard $0.30 per pound indemnity will spot you about $30 if your plasma TV gets stolen. The storage facility operator may offer you additional coverage, but while your policy may cover earthquakes, tornadoes, and missile strikes, far more commonplace perils of storage, such as mold, mildew, and vermin, are often left out of the terms altogether, but no one will bother to tell you that until it's too late.
The storage operator loves to splurge on expensive-looking security gadgets to doll up the outside of his facility, but he won't tell you that the real danger is on the inside. With thousands of other clients on his roster, the chances of a couple dozen of them being crooks are virtually inevitable, and if the manager blows all his security expenses on a showy storefront, any one of them can waltz up to your locker, clip off the three-dollar padlock, and help himself to your valuables, heirlooms, and private records."
Protecting Yourself:
As with any service, the best way to avoid getting ripped off is to bypass the service altogether. What you can't keep at your place, consider lending to friend or relative, or, better yet, donating to charity. Not only do you have the chance to contribute to your community, but many donations are tax-deductible. Unfortunately, not all charities will accept a box of Village People memorabilia, so sometimes, you'll have to enter the sellers' market. Ever-popular online auctioneers eBay will give your castaways exposure to millions of people across the country. If you're trying to unload six-foot chiffonier, however, the shipping charges may prove prohibitive, so try a community-based alternative like craigslist. There's nothing wrong with old-fashioned classified ads, yard sales, and second-hand shops, either.
Alas, sometimes you just can't bear to say good-bye to that pea-green shag divan. If you have no choice but to entrust your property to a storage provider, you must, as always, shop around. The storage racket is a very lucrative business, so you're sure to find hearty competition in even the most isolated parts of the country. Once you've compiled the names of every storage facility in your area, the first thing you'll want to do is check with your local Better Business Bureau for any complaints against them. You should always consult with your local BBB whenever you make a serious investment of any sort, regardless of the service, but never let a clean record alone sway you; while untold thousands of people in America are ripped off, gypped, or conned in one way or another every day, only a tiny minority actually bother to report it.
When considering a storage facility, pay a personal visit to the center. Look for a clean, professional appearance, especially on the interior of the facility. Ask the manager about the security technology they use, both on the outside and on the inside. If the facility does use video cameras, ask how often they replace the tapes. Some storage centers may offer cameras as extra security but will in fact re-record over tapes every 30-60 days. While most facilities dress themselves up in high-tech gadgetry to scare off potential thieves (and impress potential clients), many still rely on simple padlocks for individual storage spaces. Remember, no matter how legitimate the operation may be, you have no guarantees about the clientele. Indeed, storage facilities are a time-honored haunt of the criminal element, not only as a drop-off spot for stolen property, but, at the same time, a target to pick up even more. Although the prices will be lower in padlock alleys, restrict your search to businesses that have installed digital keycodes throughout the facility. A few facilities even maintain alarm systems for each storage unit; these are worthy of particular consideration.
As with any industry, different providers will present different advantages and disadvantages. Some will be open for access 24 hours a day, others will close before you have a chance to get there after work. Some will send a driver to transport your belongings free of charge, others will leave you to rent a truck, load it, haul it, and unload it for yourself. You have to consider your needs and demands first, then look for a storage provider that fulfills them as best as possible. Even after you've narrowed your search down, however, you'll still have choices to make. Some facilities will offer climate control as an option but tack on a hefty surcharge for it. Again, you'll want to consider your own situation; if all you want to store is a few boxes of files, climate control is not something you'll need—or want—to spend an extra $15 a month on.
The contract will specify your monthly fee; most facilities will give you a binding figure, but some may only have an estimate. By law, however, you cannot be charged 10% over your estimate. Review the contract carefully before you sign, and be on the look-out for hidden costs. Unfortunately, the contract may not include every charge you stand to incur. Labor fees, for example, are often excluded from storage contracts, so be sure to ask the provider if you'll be charged for these separately. Ask about all charges the facility imposes beyond the terms of the contract for depositing, visiting, or retrieving items. Most storage facilities will require a security deposit, but this should be refundable. You'll want to check the contract carefully for the terms of the refund; they will often be buried deep in the fine print. Before signing the contract, ask the manager about the conditions of the refund. If he seems evasive, or if what he says does not jibe with what's written in his contract, or if his conditions seem unduly stringent, you are not dealing with an honest operation.
Storage facilities all offer basic insurance as part of contract, but you must purchase supplemental coverage, whether from the facility or elsewhere. Fortunately, your homeowner's or renter's insurance may cover items while you leave them in storage. Talk with your insurance provider, and ask specifically about what the stipulations are for dropping off and picking up your property; insurers typically have strict regulations that must be followed precisely, or else you'll risk voiding your coverage. Some facilities require you to choose their premium policy as part of your contract; typically, that coverage will still be hopelessly inadequate, so you'd still have to take out insurance somewhere else, meaning you'd be better off bypassing that provider and his quote-unquote "premium" policy altogether. On the other hand, many storage facilities buy plans from third parties in bulk, and they can offer you a comprehensive policy from a reputable institution at a discounted rate. Whatever policy you decide to get and whomever you decide to get it from, however, be sure you know just where you are—and aren't—covered. Common scourges of storage facilities like mold, mildew, and vermin, all of which can irreparably damage your belongings, are often left off of storage insurance policies, especially those offered by the facilities themselves. You'll want a policy that covers all foreseeable problems, not just fire and theft, so ask the insurer about where you're protected and where you're not. Before you sign your name anywhere, read everything carefully (twice) and be sure you understand every detail.
When you're ready to lock your things away, make sure you take a detailed inventory of every item you deposit. To protect themselves from fraudulent claims, most storage facilities will perform an inventory with you, but if they don't, be sure to draw one up for yourself anyway. You'll also want to take a picture of your belongings just before you commit them to storage, so you have photographic proof of what you're storing and what condition it's in.
Finally, even if you're convinced you're trusting your belongings to the safest, cleanest, most upstanding storage company in America, never drop your off your stuff, pocket the key, and forget all about it. Whether you plan to keep your items in storage for weeks or for years, you must check your space periodically. First of all, you'll be able to catch and report any developing mold or mildew problems before your property sustains any lasting damage. Just as importantly, however, should the worst happen and someone break into your locker, you'll want to know as soon as possible; in your subsequent conferences with the facility, the insurer, and the police, things will be much easier for you if you know your things were stolen sometime in the last month rather than sometime in the last year.
Just Because You Were Curious:
Think storage seekers are just a niche market? According to the Self Storage Association, the industry's premier trade group, Americans are renting out two billion square feet of storage space, or more than three times the area of Manhattan Island. That's 6.86 square feet of storage space for every person in America, meaning there's enough room for every one of us just in those storage lockers we're renting out. The lesson here is if you're at all unsure about a place, don't just shrug your shoulders and ask where you sign. No matter what part of the country you live in, with demand this pervasive, you'll find several competitors within a reasonable distance. And while you should never get too complacent about what you leave in storage, you're sure to find a facility where, whenever you lock the door to your belongings, you can actually feel secure.
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]]>Carpet Cleaners: Sucking Your Wallet Drytag:servicesnitch.com,2006:index.php/site/index/1.272006-12-29T22:41:00Z2006-12-29T22:52:13Zadminpegr.technical@gmail.com What It Costs:
Carpet cleaners generally charge their clients in one of two ways: by room or by square foot. Although you might suppose that a flat per-room fee would be ideal, this is precisely what unscrupulous carpet cleaners are counting on, and precisely why unscrupulous carpet cleaners charge by the room. Think about it: if a cleaner who charges by the room shows up at Graceland, how will he turn a profit? As any crook turns a profit: surcharges. If a room exceeds some arbitrary area, or even if it's shaped a certain way, he'll have the pretext to charge you extra. The cleaner who charges by the square foot, on the other hand, won't need to resort to chicanery if he finds himself in a larger-than-expected room; he'll still make the same profit per man-hour that he would in any other room in the country. Don't think that charging by the square foot automatically vindicates a cleaner, but it is an encouraging first sign.
The average cost for carpet cleaning is about $0.30 per square foot. Since the average home in America has about 1,000 square feet of carpet, that comes out to around $300 a cleaning. Pre-conditioning should be included in your rate. Your rate may also depend on the method employed by the particular provider; dry cleaning, which doesn't clean as deeply as wet cleaning, will sometimes cost less. As with any service, you may get a discount if you pay for more than the average consumer, and you may be penalized if you pay for less than the average consumer, even by honest cleaners; if you have just 200 square feet of carpet to clean, for instance, the cleaner might not even defray the cost of transportation and set-up on his standard rate. Also as with any service, the prices you'll find will depend considerably on what part of the country you live in.
The Carpet Cleaner Says:
"I am a skilled and licensed professional at the top of my trade. As a member of your community, I run an honest, ethical operation to serve you and your neighbors' carpet cleaning needs. Not only do I offer fair and affordable estimates to my clients, but I also offer advice on which treatments will help extend the life of their carpet. After all, aside from making your carpet like new again, nothing makes me happier than saving you money."
The Snitch Says:
"Despite their trade of choice, carpet cleaners are no squeakier than the rest of us, and often quite the opposite. While any industry will have honest and dishonest practitioners, carpet cleaning is a high-demand profession that doesn't require much more training than an instruction manual, and therefore anybody could walk through your door when you call for a carpet cleaning service.
The carpet cleaner will advertise unheard-of, ultra-low, limited-time prices in the Sunday paper, but you won't find out that the rate only applies to rooms the size of the coupon until he's shown up for the cleaning. Even after he's jacked up your rate to what you would have paid anywhere else, that figure still may not include the pre-treatment, or even the detergent, but only the labor—that is, the labor it takes to slop detergent-free water on your carpet, which you could have done yourself.
The carpet cleaner will offer you one estimate over the phone, then show up as scheduled and happen to mention, for the first time, that that's only for his "basic" service. Now he'll tell you all about his vast, multi-tiered array of services, each more expensive than the last. Of course, the more "premium" a package you spring for, the more effective the cleaning will be, he'll say. So, unless you're satisfied with a "basic" treatment of the filth, germs, and allergens proliferating in the material you and your family walk across day in and day out—a treatment, the cleaner will tell you, that won't last nearly as long as his more select options—you'll quickly sign up for the super-deluxe glamour carpet cleaning.
When he's run you up for more than you ever paid for the carpet, the carpet cleaner will tirelessly push additional services on you, like deodorizing or Scotchgarding. These services are never really necessary, but carpet cleaners build their careers on convincing their clients otherwise. The true dregs of the racket, the ones lower than any of the gunk they'll ever pick out of your carpet, will advertise rates slightly higher than their competitors but claim to include a free Scotchgarding, while all the other carpet cleaners around sell Scotchgard treatments separately and at a much higher price. Unfortunately, this complimentary "Scotchgard" won't even guard against Scotch tape, and your best hope is that it's just water…which it probably will be."
Protecting Yourself:
Before any carpet cleaning man rings your doorbell, you must, as always, comparison shop. Aside from consulting the Internet and your local phone book, you can also ask your friends and neighbors for recommendations. When you make your preliminary inquiries, never commit to anything over the phone. Insist on an estimate based on square footage, not the number of rooms. If they refuse, hang up and move on to the next candidate. Do the measurements beforehand, so he can give you an estimate over the phone. When they first give you a figure, ask whether they have multiple tiers of service; they may just be quoting a "basic" cleaning, which will be little more than light sweeping. Ask if their operation is certified by the Institute of Inspection, Cleaning, and Restoration Certification, the industry's premier licensing group. Any cleaner on the up-and-up will earn a dependable stable of satisfied customers, so ask the representative for references. After you've narrowed your search a little, check with your local Better Business Bureau for complaints against the operations.
If you've been quoted a reasonable price and don't detect any dirt swept under the rug, have the cleaner come into your home to give you a written estimate. Don't agree to anything until he's actually seen all the carpet his company will clean; that way, he can't appeal to any "unforeseen circumstances" later. Ask if his estimate includes the cost of moving furniture, or if you can possibly get a lower price by moving the furniture yourself. Demand, with the paper estimate, a money-back guarantee, in writing. A legitimate cleaner will never worry about leaving a customer unsatisfied; all he has to do is get the carpets clean and charge the price he said he would charge.
Beware of any business—carpet cleaning or otherwise—that advertises rates drastically lower than local competition: they are just hoping to get their foot through the door (literally) and foist a bait-and-switch on any takers (read: suckers), knowing it will be very hard to turn away a service they need when it's all set up in front of them. Businesses have to turn a profit, after all, and $9.95 per room is not going to feed anyone's family. You'll end up paying a lot less with someone who offers more sensible-sounding rates up front.
Spot cleaning is where many unfortunate and unprepared consumers find themselves ripped off on their carpet cleaning bill. Special attention to a stain means devoting time and resources to it, and that means costs to the cleaner. While some carpet cleaners will include stain removal in their prices, others will not, so be sure to ask beforehand. When the carpet cleaner comes into your home to conduct an estimate, point out any stains on your carpeting, and ask whether their treatment will be covered in your rate.
Different cleaning businesses employ different cleaning methods, and some methods may not be safe for your carpet, so check your carpeting warranty for anything prohibited by the manufacturer. The dirty cleaner may vigorously protest that no matter what the warranty tells you, his stuff is safe on your carpet, when he is, at best, unsure. Remember that you're better off turning away a cleaner that may have been safe after all than acquiescing to a cleaner that irreparably damages your carpet, costing you thousands of dollars and even more headaches to replace.
Unnecessary add-on services, such as anti-static treatments, deodorizers, and fabric protectors (also called soil retardants), are the august preserve of the carpet cleaning industry. While fabric protectors, in particular, do extend the life of your carpet, they are always expensive and never necessary. If you do opt for a protector, make sure it's a reputable brand like Scotchgard or DuPont Teflon. Protection will run you an extra 10 to 20 cents per square foot, but remember that it costs almost as much for the carpet cleaner, so treat anyone who boasts of a complimentary Scotchgarding with suspicion.
As always, read the contract carefully before you sign anything, no matter if you're dealing with a one-branch outfit or a national cleaning empire. Never assume that a big-wig in the business won't stoop to ripping you off; major companies in the carpet cleaning industry have built their name (and their profits) on low advertised rates grossly inflated by sneaky surcharges and extras.
The techniques of carpet cleaning are easily applied above the floor, too. Just as your local butcher doesn't exclusively cut lamb, many carpet cleaning companies don't exclusively clean carpets, but also handle upholstery, drapes, ceilings, and even air ducts. Obviously, the more services you order, the higher your bill will be, but a package deal will cost you much less than a dozen separate cleanings. If your whole household is due for a sprucing, talk with the cleaner and ask about what other services he offers; most operations will happily offer you a discount if you sign on for more than just a carpet cleaning.
Just Because You Were Curious:
Although most people get their carpet cleaned about once every seven years, the industry recommends you get it done at least every 18 months. Hardly a shocker that they want you to pay for their services more often, but on the other hand, many of their arguments for regular cleaning do, in fact, wash. First of all, even frequent vacuuming won't clean out the filth lodged deep below the surface of your carpet. Second, no matter how immaculate your carpet appears, untold millions of allergens, microbes, and other hidden threats to your family's health thrive between the fibers. Finally, regular cleaning will extend the life of your carpet, and you will, in the end, save money. So while cleaning that often may seem like a hassle, remember, barring changes of management or radical service overhauls, you only have to look for a cleaner once. Once you've followed our steps and found the trustworthy, affordable cleaner in your area who's right for you, getting your carpet clean again is just a matter of calling him back.
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]]>Stock Brokers and Dealers in Financial Products: Tricks of the Tradetag:servicesnitch.com,2006:index.php/site/index/1.262006-09-01T06:58:00Z2006-09-01T07:54:54Zadminpegr.technical@gmail.com
Each broker is affiliated with a firm, whether an industry powerhouse like Merrill Lynch or Smith Barney or a less renowned local outfit. In-house regulation of brokers, however, never goes far beyond the bottom line. In most arrangements, the broker makes a commission on every trade his clients make, which he splits with the firm. So long as the broker is making the firm money, the firm won't care how he does it.
While brokers have to pass licensing exams and could face scrutiny by state and federal government auditors, most dishonest brokers, like dishonest attorneys, get away with a slap on the wrist, in the unlikely event that they get in trouble at all. Nowhere does the expression “caveat emptor” apply more strongly than in the finance industry.
What It Costs:
Brokers' fees will depend first and foremost on the extent of their service. So-called "discount" brokers will execute any stock trade their client wishes without blinking; the dozens of online trading services fall under this category. Some discount brokers offer commissions as low as $10 per trade with no ceiling on buying price or number of shares. Of course, these low fees cover nothing more than the transaction itself.
"Full-service" brokers are what most people think of when they think of stock brokers. They're the ones who give advice, who feed clients hot tips, warn clients not to give up on that declining stock too quickly and who state what their clients should buy and sell. Some people give their broker carte blanche access to their portfolio and allow him to execute whatever trades he sees fit without their prior approval. The commission rates for full-service brokers are significantly higher than discount brokers'. They're usually up to $50 – $150 a trade, and it can be even more depending on the price of the stock and how many shares are purchased.
Many firms now offer flat-fee accounts to their customers. Clients are billed a percentage of their assets on a monthly cycle. Under these plans, brokers get a monthly cut as opposed to a per-trade cut. While the lure of commission-free trading is tempting, it could take a lot of trades to justify the flat rate so caution is required. Brokers are sometimes even given incentives to sign clients to fee-based plans, since it usually makes the firm more money. What's more, a commission may still apply to certain trades, even as the money a client makes from those trades counts towards the calculation of the monthly fee, but all that will be buried deep in the fine print.
The Stock Broker Says:
“Because of my extensive training, my reputable certification, and my tenure at an established firm, you can be sure I am an honest, hard-working professional who looks out for the interests of my clients. Whenever I offer advice or make a trade, I will always keep your long-term investment goals in mind. If you ever need to get in touch with me, I will always be available for you, whether you have ten million or ten thousand invested with us. Every financial relationship is built on trust, so how could I be where I am today if you couldn't trust me?”
The Snitch Says:
“Nobody in the history of the world has ever become a stock broker because he loved the social aspect of calling people to find out if they felt like buying or selling stock and the challenge of filling out all the paperwork if someone said yes. To put it bluntly, most stock brokers would sell their own mother on the NASDAQ if they could. Theoretically, this can be a good thing because the more money you make, the more trading you can do, which means more commissions for him.
Unfortunately, so many opportunities exist for him to make a short-term profit at your expensive that doing so can be nearly irresistible. And needless to say he won’t get promoted any time soon for wasting opportunities to make the firm money. Industry reps will tell you these are just a few bad apples, but all you have to do is sit down at any bar near Wall Street around 5 PM and listen to people’s trusted financial advisors speaking amongst each other. Considering the culture of greed enveloping the finance industry and the tremendous losses you stand to suffer if you happen upon one of these “bad apples”, the entire orchard deserves suspicion.
Now before we discuss the conventional tricks of the trade, it should be noted that when a few “bad apples” caused Enron and MCI/Worldcom to tank a few years ago and thousands of people lost their life savings, Congress woke up and started holding a lot more people in the finance industry accountable for their actions. So while we are still seeing plenty of the tricks covered below, the trend is turning towards fee-based services and away from commission-based services.
Fee-based services sound great, but what this boils down to is so many fees for so many little things that you end up paying just as much or more than if you had paid commissions directly. Stock brokers don’t like it because it means more for the boss and less for them. So now we’re seeing a split in the finance community whereby the more legitimate brokers are getting licensed to offer fee-based advice and to sell alternative investment vehicles that still pay giant commissions like annuities and life insurance. The more “hardcore” brokers are going into the same line of work in as-yet unregulated professions with very big commissions, such as the mortgage brokerage industry (which resembles Wall Street in the 1980’s right now).
One staple tactic of the crooked broker is churning. Churning exploits the significant per-trade commission rates most firms charge, of which 30% – 50% will go straight into the broker's pocket. The broker will advise you into making hasty trades or, if you've given him the discretion, execute these trades himself. He'll buy and sell without any discernible pattern to any of it, except that he's doing it all as quickly as possible. By the time you catch on to him, he'll have pocketed thousands of dollars of your money in commissions, while you'll be lucky to have made a dime off of all those trades put together.
Incentives are another tactic unhelpful to the buyer of financial services. Because the broker is affiliated with a firm, and most firms do not limit their financial services to brokerage alone, the broker may be given "incentives" (read: kickbacks) to get you to invest in whatever other financial products are in the firm's best interest. Of course, he won't tell you it's in the firm's best interest, and he certainly won't tell you he's getting a kickback. For example, the firm may be affiliated with Metlife. When it sells a financial product offered by another Metlife-affiliated company, there would be an extra commission (this is just a made-up example. I have no idea what Metlife’s practices are.)
A little further down the ethics scale, your broker may be taking patently illegal bribes from an outside company without the firm's knowledge, and coaxing his clients into buying the stock even if it's sure to crash and burn. The most unethical of the bunch will just find a way to take your money and disguise it as an investment loss.”
Protecting Yourself:
Ironically, one of the world’s wealthiest financiers recently started a blog. One entry was on how to invest. He said to invest in yourself through education, training and experience and to make more money through your enhanced abilities. He said that if you still had excess capital after buying your house, car and whatever else you might need, you should just buy government bonds and not think about it. Who needs Service Snitch with guys like that around?
Anyway, when you're looking to invest your money with someone, always choose an individual broker, not the firm he works for. Too many people call up investment firms without any idea of what kind of broker they need and take anyone the firm gives them. Remember, the broker's going to be the one who handles your money, with little to no oversight from the firm. When it comes to brokers, the firm is nothing more than a glorified referral agency. You choose a doctor based on his qualifications and your personal needs, not the referral agency he's listed with. One way to get a lead on a good broker is to ask for recommendations from people you know.
Ask any broker you're considering how long he's been in the business and how long he's been with his firm. If he's just joined up, he may be inexperienced, or he may have been run out of his last firm for incompetence or worse. Ask the broker how many clients he has, and whether you'll be able to speak with him personally whenever you need to talk to him. Too many brokers won't deign to speak to you if you have less than $100,000 in assets, and will shunt any calls from their "less important" clients to an assistant, a secretary, or a call center.
Brokers are just like any other investors. Some of them are aggressive, all-or-nothing desperados, some are more cautious and conservative. You'll want to find a broker whose approach to investing is compatible with your own. Discuss with any candidates what you're looking for in a broker and how much control over your portfolio you want to retain, if any. Some of them love nothing more than having free rein over your assets, others are more comfortable acting as advisors. Don't settle on a broker until you're sure you've found one who suits your style.
Always check into the background of any broker you're considering. The National Association of Securities Dealers (NASD), a self-regulatory organization of investment firms, provides an online service called BrokerCheck that lets you peek into a broker's history, including any past indiscretions. You should also call up your state's securities commission to see if they have anything on file.
Ask the broker candidate how he gets paid. Does he tout investments to his clients at his firm's behest and make money off of the kickbacks? He'll be pretty shocked at such a blunt question, but this way you'll let him know from the get-go that you're no sucker. If you've signed on with a broker and he relentlessly pushes you into an investment even after you've made it clear you're not interested, it's a good sign he's trying to make a kickback, whether from his firm or from someone else.
Don't assume a broker is reputable just because he works for a reputable firm. The big-name multinationals want to make money just as much anyone, and if a broker gets the job done for them, they won't care how he does it. In fact, they can't afford to care how he does it, since he's just one of hundreds of brokers they house.
Not only is malfeasance less likely to escape the attention of smaller firms, but brokers at smaller firms typically service fewer clients, meaning you'll get personalized attention no matter what your assets are. Unfortunately, when big-firm brokers get caught with their hands in someone else's pockets, they sometimes seek refuge in the relative anonymity of a smaller outfit. In the end, no matter what size the firm is, you always have to do a background check on a broker.
Many people think commission rates are inflexible, but if you negotiate in earnest with your broker before you sign on with him, he may come down by as much as 20% – 30%. Remember, both the broker and the firm will rather have your business at a discount than not have your business at all. You also might be able to work out an arrangement where you pay full commission on trades done on your broker's advice and a discounted rate on trades done on your own accord.
Every industry has its share of unmitigated crooks, and the brokers of this breed will take whatever money you give them and never make one investment. Some of them will try to get away with this by withholding your monthly statements, so if you ever miss a statement, call the firm immediately. Most brokers now offer real-time online service where you can check up on your portfolio at any time; this makes it much easier for you to detect any suspicious activity. Compare your online statements with your paper statements every month, and call the firm immediately if you notice any discrepancy.
A less drastic but much sneakier way for the broker to rip you off is churning. It can be difficult to tell whether a broker is churning or simply being aggressive, but a telltale sign is inconsistency: if a broker sells anything as soon as it makes a dime but hangs on to duds long after they plummet to the ground, he's probably churning. A broker is not going to be at once a patient and an impatient trader unless his investments are not in good faith.
What's the best way to avoid getting scammed by a con broker? Taking charge of your own money and working with a discount firm or online service. Independent investing is not for everyone, but if you have the time, the patience, and the know-how, you have no reason to trust your financial future to a stranger, let alone pay his ridiculous commission rates. If you want to trade for yourself but lack confidence in your investment acumen, you can always pick up a few books at your local library or take a class in investing at a nearby college. And in the meanwhile, government securities pay nicely. Bottom line, the more direct control you exercise over your money, the less opportunity anyone has to take it away from you.
Just Because You Were Curious:
Here are some of the distinctions between the various fields stock brokers identify themselves with:
Broker: An individual--licensed to sell securities--who acts as an intermediary between you and the companies and agencies that sell securities on the open market.
Chartered Financial Analyst (CFA): An advisor who has passed a test--covering economics, accounting, security analysis, and money management--administered by the Institute of Chartered Financial Analysts.
Chartered Financial Consultant (ChFC): An advisor who has completed a program of economics, taxes, insurance, and investing.
Chartered Investment Council (CIC): An individual who has passed tests in economics, accounting, taxes, and money management and has at least five years of relevant work experience.
Chartered Life Underwriter (CLU): An advisor who has completed training in life insurance and personal insurance planning, is licensed by his or her state, and appointed to sell insurance products by one or more specific insurance companies.
Registered Investment Advisor: An investment advisor registered with the Securities and Exchange Commission. No standardized test for certification is required.
Registered Representative: An advisor who is licensed to sell securities and has the legal power of an agent, having passed the Series 7 and Series 63 exams; usually works for a brokerage licensed by the SEC, NYSE, and NASD.
Certified Financial Planner (CFP): An advisor who has passed a rigorous series of exams covering most or all of the above topics.
(Excerpted from MSmoney.com) {extended}
]]>Car / Auto Mechanics: Putting a Dent In Your Wallettag:servicesnitch.com,2006:index.php/site/index/1.252006-09-01T04:34:00Z2006-09-01T04:42:17Zadminpegr.technical@gmail.comWhat It Costs:
Every service or repair job has two cost components: parts and labor. Just what they'll be put together will vary widely depending on what the job is. If you're coming in for scheduled maintenance on a like-new ride with no problems to speak of, it will cost you $100 – $300, depending on the make and model of your car; more expensive vehicles typically need more expensive replacement parts. If you sputter into the lot looking for a tune-up on your old warhorse, that can run you $500 – $1,000 or more. For older cars, the cost will depend not only on make and model, but age, mileage, and how conscientious you've been about getting your car serviced in the past. If you're trying to reconstruct a wreck after a head-on collision, you can expect the bill to be a few thousand dollars. Accident damage, however, may be covered in whole or in part by your insurance policy.
The Car / Auto Mechanic Says:
“I am an honest, reliable, and dedicated professional. I became an auto mechanic because I love cars, and all I want is to give your car the care it deserves at a price that's fair both to me and to you. I always take pains to make my estimates as accurate as possible, and, once I begin the repairs, I do everything I can to stay within the figure I gave you. I will never try to foist unnecessary parts or services on you and will only do the work we agreed upon beforehand. You'll be back on the road in no time, but in a much safer car than the one you came in with. Because above everything else, my first interest is to keep you and your family safe.”
The Snitch Says:
“While few people actually put your interests ahead of their own, most people at least make an effort to consider them. Of course, most people aren't car mechanics. No one else has nearly as abysmal a track record as mechanics do when it comes to consideration of the client. Auto mechanics typically provoke more complaints to consumer protection agencies than any other profession. While a car salesman may sucker you into buying something you don't want or need, auto mechanics take the exploitation much further, cashing in on their "expert" cachet and preying on your everyday fears. If you pull into the lot for a routine tune-up, don't be surprised if the mechanic 'discovers' a few very critical (and very expensive) problems along the way. And if you don't get them fixed right now—that is, in his shop—the worst could happen the moment you pull back onto the freeway, he'll warn. It's a bit like a doctor insisting you need an emergency quadruple bypass when you just came in for a flu shot.
The car mechanic hooks his victims on flashy marketing gimmicks. That 'free brake inspection' is just a pretext to get you into the lot so he can tell you you need new brakes. That 'low-cost tune-up' doesn't include anything beyond a spark plug change, if that, and if you want anything else, it'll cost you more than if you'd gotten a regular tune-up at a more reputable outlet.
Mechanics love nothing more than to beat each other's estimates, and many will factor out some or all of the parts in order to give you the lowest possible quote. For instance, if you want your radiator replaced, one mechanic may offer you a lower price than any other game in town, but deliberately leave off the cost of antifreeze. It'll show up on your bill later, of course, and by then that price will be higher than all the other estimates you heard.
Unfortunately, these are among the more honest practices that car mechanics engage in. It is accepted practice to change parts that aren’t broken but which are statistically likely to break soon, and to engage in repairs that may or may not resolve difficult-to-diagnose problems. Obviously, it’s also a common practice to make up repairs that weren’t done, and to purposely break things so that they need to be repaired. Kind of like when a customer conveniently gets a flat tire in a parking garage and the attendants are ready and waiting to repair it on the spot for the right fee.
How do unscrupulous auto mechanics get away with scamming their customers so easily? Because, in most states, once they have started service on your car, they are legally entitled to keep it until you pay, and to repossess it if you stop the check or dispute the credit card charge. Even if they pop a tire right in front of your face and then demand money to fix your tire, you’re not getting your car back until you either pay, or you win when your court date comes up several months later (and who knows what would be broken in that case.) So the lesson is that if you're not careful when you choose a mechanic, you won't realize until you get that $3,000 invoice that you've been ripped off…but unless you want to walk home, there's not much you can do except hand over the money."
Protecting Yourself:
When considering a repair shop—and you should consider several repair shops before deciding on one—ask for references. Any upstanding repair shop will have dozens of loyal customers in their records who will happily attest to their workmanship. You should also ask the mechanics whether they have certification from the National Institute for Automotive Service Excellence (ASE). To earn ASE certification in a particular service (engines, brakes, etc.), a mechanic has to pass a written test, and he has to renew his certification every five years. Any ASE-certified mechanic will put their certificate up on the wall, so ask to see it, and check the date. Shops that meet particularly rigorous standards will have the ASE Blue Seal of Excellence. If a shop has the Blue Seal, 75% of the mechanics have ASE certification and at least one technician has ASE certification in every service offered by the repair shop. The American Automobile Association sets similarly high standards for outlets that are listed in their Approved Auto Repair directory. No matter how many certificates and awards a shop has, however, always call your local Better Business Bureau to see if any complaints have been filed against them. Finally, ask the shop if they guarantee or warranty their service—all reputable outlets will—and ask if they put it in writing. As shady as the industry's reputation is, you have many ways of establishing accountability and telling an honest garage from a bunch of grifters.
If you have an expensive car, go to a repair shop that specializes in your type of car. You can look on the Internet for enthusiast clubs and websites for your car and ask the members or owners if anyone knows of a good repair shop in your area. These guys are obsessed with the same type of car you have and someone will almost definitely know a mechanic if that person is not a mechanic himself.
Always ask for an estimate before any repairs are made and before you commit to anything. You want a detailed explanation of what the estimate includes. Are all the parts and accessories covered? Do they anticipate you'll have to pay for something else? As always, once you have an estimate, shop around. If a garage tells you they can't figure out the full extent or the exact nature of the problem and so can't make any estimate before beginning work on the car, reserve judgment until you hear a few more opinions. If a shop gives you an estimate which you feel is unreasonable, say so. Remind them you're free to take your business elsewhere; they may lower the price. You can always play garages off each other, too. If one mechanic gives you an estimate of $300 when the shop across town puts the same job at $250, ask him how he justifies the higher price. Be sure to get as many opinions as possible, but remember that an estimate dramatically lower than all the competition is as suspect as one that's dramatically higher. When you finally settle on the right shop, get your estimate written and signed before the work begins. Many states forbid mechanics from exceeding the written estimate by more than 10% without your consent.
If you have an unexpected problem with a relatively new car, check the National Highway Traffic Safety Administration's website and search for your make and model to find any recalls or technical service bulletins (TSB's). A recall is a defect acknowledged by the manufacturer, while a TSB is a defect enough people have noticed to merit attention, but not enough that the manufacturer has issued a recall for it yet. If the problem with your car is listed as a recall or a TSB, you can usually get your car serviced at your local dealership free of charge.
Before taking in your vehicle for scheduled maintenance, whether to a dealership or an independent garage, check the owner's manual to see just what parts need service or replacement at this benchmark. If the mechanic insists your car needs more service than what you suggest, show him the manual and see what he says. Chances are he'll back off his initial assessment pretty quickly.
If you're taking in your car for a repair, buy a service manual (also called a "repair manual" or “shop manual”) for your model. It tells how much time all sorts of different repairs take, on average. It is what mechanics use to estimate their prices. Read up on the service you need so when you take your car to the garage you'll know just what the mechanic is talking about, and he won't be able to fast-talk you into an extortionate invoice. You can find a manual at automotive specialty outfits like Pep Boys and AutoZone.
If you're looking to get a tune-up on your vehicle, remember that what constitutes a tune-up will vary from shop to shop. Ask the mechanic what is included in his tune-up and demand a clear answer. If he seems evasive, the "tune-up" is probably just an overpriced spark plug replacement. Even worse, all the other parts that need to be changed—like the filters and the PCV valve—will be left untouched.
If (Heaven forbid) you have a transmission problem with your car, even the honest mechanics out there will tell you a precise estimate is impossible. Before they can give you a price, they need to know just what the problem is, and before they can do that, they need to take the car apart. Don't let anyone lay a finger on the car until he tells you what the worst case scenario is, and what the cost will be. Remember that if you let your mechanic tear your car apart, you'll have to pay whatever he charges if you ever want it put back together again.
Sometimes, when you bring in a car for maintenance or minor repairs, the mechanic will tell you he's found some potentially serious problem that you never suspected. When this happens, use your common sense. If your car's a run-down junker that hasn't been serviced since the Reagan administration, it's probably legitimate. If it's a three-month-old luxury model that you've babied since you drove it off the lot, it's probably a scam. The mechanic will make foreboding predictions if you choose to let this "problem" go unattended, but don't give in to his fear-mongering before hearing a few more opinions.
If you're taking in your vehicle because you need some parts replaced, tell the mechanic beforehand that you'd like the old parts back afterwards. You'll want to be able to tell he actually did the work, after all. Before you agree to anything, however, be sure to ask the mechanic how long he thinks the replacement parts will last. The quality and durability of replacement parts can vary widely from shop to shop.
After the repairs are complete, examine your bill carefully. If there's any charge or fee you don't understand, ask for clarification. Before you pay, take the car out for a brief test drive, even just around the parking lot, with someone from the shop. That way, you'll have a witness to any lingering problems. If you still hear the same rattling or clicking or scraping that made you bring the car into the garage in the first place, tell the manager of the shop that you won't take the car back and you won't pay the bill until it's fixed.
If you don't want any bank-breaking mechanic's bills cropping up in your future, you have to practice preventive maintenance. Take your car in for routine tune-ups at the scheduled benchmarks. Change your oil regularly and keep an eye on the coolant, transmission, and brake fluid levels. It'll seem like a hassle sometimes, but it'll cost you much less time and money in the long run. After all, the best way to avoid getting ripped off is to avoid getting into situations where you're susceptible to getting ripped off altogether.
Just Because You Were Curious:
Car mechanics usually get paid on a commission basis and that commission is usually 40% of the gross cost of labor. So if you pay $1000 for 5 hours of labor, the mechanic gets $400. Mechanics can get fired for failing to meet sales quotas, just like anyone else.
Rarely does anybody in the automotive service industry have a formal education beyond the high school level, but plenty of people take specialized classes offered by manufacturers and dealers. People in the automobile repair industry may choose to specialize in one thing or to become general mechanics.
The full mechanic is the most experienced. Those new to automotive service usually start as trainee technicians, technicians’ helpers, or lubrication workers, and gradually acquire and practice their skills by working with experienced mechanics and technicians. With a few months’ experience, beginners perform many routine service tasks and make simple repairs. While some graduates of postsecondary automotive training programs are often able to earn promotion to the journey level after only a few months on the job, it typically takes 2 to 5 years of experience to become a journey level service technician, who is expected to quickly perform the more difficult types of routine service and repairs. An additional 1 to 2 years of experience familiarizes technicians with all types of repairs. Complex specialties, such as transmission repair, require another year or two of training and experience. In contrast, brake specialists may learn their jobs in considerably less time because they do not need a complete knowledge of automotive repair. (Occupational Outlook Handbook).
{extended}
]]>Mortgage Brokers: Banking On Your Moneytag:servicesnitch.com,2006:index.php/site/index/1.242006-08-31T17:29:00Z2006-08-31T15:53:40Zadminpegr.technical@gmail.com
When looking for someone to mortgage your property to, you have two options: a mortgage lender (i.e. a bank) or a mortgage broker. Because many people are intimidated by all the numbers and legalese, most mortgages are executed through brokers. Brokers find lenders for you and do most of the work you'd have to do yourself otherwise. As with any other broker, the mortgage broker is just a middleman who makes most of his profits on mark-up.
Because of the volume of his business, the broker is entitled to wholesale rates from lenders that the general public is not. Of course, for his clients, he'll inflate the figures right back up again and pocket the difference, plus charge you a very high fee for his services. If you find an ethical mortgage broker you will end up paying just about the same amount of money that you would if you dealt with a bank directly. But in an industry where the broker keeps whatever fees he can get you to pay either immediately or over the long-term, even the most ethical of us would need to examine our own definition of honesty.
What It Costs:
The cost of the mortgage will depend on the amount of the loan, the term of the mortgage, your credit score and the interest rate. If you have an excellent credit history, the interest rate you're given will correspond very closely to the mortgage rate specified by the federal government. If you have a less than perfect credit score, you will get quoted a higher interest rate to reflect the additional risk that the bank considers you to represent, plus whatever other random fees the broker can conjure up.
While the precise definition is somewhat obscure, suffice it to say that the government rate is what the lender must end up "making" from the mortgage. So if all lenders have to make the same amount, how can they compete? By undercutting each other's advertised interest rates—the only figure too many people consider when looking for a mortgage—and recouping the difference in the down payment and the typical flood of service fees: application, processing, underwriting, origination, etc.
Even under this charade of competition, you will still find that advertised interest rates don’t differ by more than 0.5% – 1.0%. A 0.5% difference in a $100,000 loan will amount to tens of thousands of dollars in the course of its term, which is way too much money to recover with a few token fees. If you find two brokers who offer you interest rates that differ by 2% or 3% for an identical loan, rest assured one of them is a scam artist.
In the end, for someone with a good credit score, the final cost will be virtually the same everywhere, but how you settle this cost, that is, how much you pay "now" and how much you pay "later", can vary widely among different mortgage plans. Many times you can get a lower interest rate by giving the bank money immediately. This “early payment” money is usually expressed in terms of "points". One point is one percent of the loan amount, so if you're borrowing $100,000 with 2 points down, you'll have to put up $2,000. You'll also have to pay any incidental fees up front, which are usually flat, but may sometimes be a percentage of the loan, especially if the down payment and the interest rate are both discounted dramatically. One of the ways that mortgage brokers have a field day is by charging you extra points on your mortgage which go directly to the broker – but more on this later.
Fortunately, the down payment, the interest rate, and most (though not always all) of the fees will be distilled into one simple figure: the annual percentage rate, or APR. Lenders and brokers are required by federal law to provide the APR on their mortgage plans, which will disclose the "effective" interest rate on the mortgage once the down payment and the fees are taken into account. So while one broker may offer an interest rate 0.25% lower than his competition, the difference between the two APR's will probably be a lot less, and the balance may even be tipped towards the competitor. While the APR makes comparison shopping for mortgages easy, you have to consider it alongside your personal situation. If, for instance, you don't plan on keeping a house for very long, you would probably choose a mortgage with a low down payment, even though the exact same APR, or indeed a slightly lower one, may be offered elsewhere.
Another thing you'll want to consider is tax deductibility. Down payments are usually tax deductible, but only for the year in which the mortgage is made. Consult a tax professional to help you determine what refunds you may be eligible for.
The Mortgage Broker Says:
"I am an extensively trained, honest, and dedicated professional who offers my customers an interest rate that's far lower than any of my competitors'. Since you'll never find a lower rate anywhere else, financing with me is a no-brainer. I will disclose all the charges up front and never mislead or trick you into signing an unfair agreement. All I want is to help you get the money you need or purchase the home you and your family have always dreamed of. Don’t worry if your credit is less than perfect – I know people and I’ll take care of you."
The Snitch Says:
"The mortgage broker’s dream is someone with an excellent credit score who comes to the mortgage broker with no knowledge of how the process works. Then the mortgage broker can arrange for a low rate, charge the client a high rate, and keep a big commission on the difference, plus whatever fees he can convince the client to pay at closing.
Realistically, most people with excellent credit just go to the bank or credit union for a loan. There is no reason to even play games with mortgage brokers. The people who come to mortgage brokers are usually people with “dings” on their credit. Mortgage brokers don’t want clients with terrible credit because then they actually do have difficulty finding a lender. What they like is clients with fair credit who are glad to get any mortgage at all – then they can explain that they went through hell and back again but at the end “sold” you to the lender. There are computers mortgage brokers have in which they enter in a client’s financial data and then I matches them up with lenders whose criteria are satisfied. Mortgage brokers have access to all sorts of expensive lenders, from private investors to high-risk banks to regular banks that would have given you a loan anyway, at a higher rate and with more points due at closing.
Mortgage brokers love to lie to you about your credit score. There are 3 credit bureaus and each has a different score for you. Most lenders use the middle score. The mortgage broker will probably use the lowest score to help convince you that your credit is terrible and you should take anything this “hero” can get you. Your middle score can be significantly better than your lowest score.
Another favorite trick of mortgage brokers is telling you that you’re getting one rate and then as close as possible to the closing informing you that you’re getting a significantly higher rate – usually when it’s too late to find alternative financing. In the “Protecting Yourself” section, below, we discuss how to deal with this.
If the mortgage broker is legitimate—and that's a big "if"—his rates are going to be pretty much the same as everyone else's, despite all his grandstanding. Sure, he may offer a lower rate by a quarter of a percentage point or so, but even then he'll recoup it through higher fees and down payments. Because the federal government specifies a rate that all lenders have to follow, you'll never find any staggering difference in price between brokers.
Of course, as with any business involving huge transactions of money, especially one as prevalent as the mortgage industry, you're going to find your share of crooks. Most mortgage crooks, however, are subtler than their likes in other industries. Brokers make their money in two ways: from the "front end" of the loan and the "back end" of the loan.
The "front end" comprises all those miscellaneous fees—application, processing, origination, etc.—that basically add up to one big broker fee. The "back end" is the money made on the mark-up between the wholesale rate he gets from the lenders and the re-inflated rate he gives you. All brokers profit from this mark-up, but the devious ones negotiate privately with lenders for what's called a "yield spread", a cash incentive for the broker to sucker you into as high an interest rate as possible. You might not think getting a pushover to bite at a 7.50% rate when the industry standard is 7.25% is such a terrible thing, but when hundreds of thousands of dollars are involved, it can cripple or break anyone's budget. The lender makes tens of thousands of dollars in extra profit from this, and will happily throw the broker a grand or two for his efforts. Other unscrupulous brokers will charge you the standard interest figure, but tack on additional points to the down payment as if he were offering a premium rate. Most people are too confused by mortgages to look anywhere beyond the interest rate and won't notice as the broker swindles them out of thousands of dollars in cash.
For all the standards the government sets for banks, and for all the strict control it exercises over mortgage rates, regulation for brokers doesn't even exist at the federal level. Many states require no license, training, registration, or certification of any kind to become a mortgage broker. Because of this complete lack of accountability, you have no way of knowing whether your broker is a clueless incompetent or a shameless grifter."
Protecting Yourself:
The best thing you can do is improve your credit to a score of approximately 650 or better so that you can use a bank and forget the mortgage broker altogether. You will never hear the mortgage broker tell you to go out of your way to improve your credit. They’ll tell you to just pay your bills on time. This keeps you good enough to get a loan but not so good that your local banker will ask you to sit down and make a deal.
If you’re buying new construction or otherwise have time until you need to make a commitment, order your credit reports and dispute anything on there which is not true and correct anything that can make you look better. Pay all your bills on time and pay more than the minimum payment on credit cards. This will improve your credit score a lot. Read on the Internet about specific methods of improving your credit. It’s a big job but worth a fortune when the bank agrees to give you a mortgage at prime.
All that being said, nothing can have a more devastating impact on your financial future than an ill-advised mortgage, so don't even think about signing anything until you shop around. When comparing brokers, remember not to consider the APR in isolation. You'll have to take your personal situation into account, not to mention the bevy of fees that don't always show up on the APR—such as the title fee, the appraisal fee, and the escrow fee—which put together can total thousands of dollars. Within three days of your application, however, government regulation requires the lender/broker to provide you with what's called a "good-faith estimate". This is a comprehensive invoice of all the costs involved in the mortgage and its closing. Weigh the APR and the good-faith estimate together when shopping for a mortgage, and do not commit to anything before you're given a good-faith estimate.
Unfortunately, good-faith estimates are, as the name implies, just estimates. Worse still, they may not always be in good faith. Because there are no laws against providing an inaccurate estimate, many brokers will knowingly set their estimates much lower than the figures that will show up in your contract on closing day. The best way around this is to "lock in" all the fees with your chosen lender beforehand. You can do it 30, 60 or 90 days in advance – for a fee, of course.
No matter what you choose, if any nasty surprises rear their heads on closing day, don't sign anything without first discussing everything with your broker. If his explanations don't satisfy you, cancel the closing. A botched deal may seem like a disaster, but spending the rest of your life in debt is much worse.
Sometimes brokers will "float" rates to potential clients, meaning they'll quote a rate considerably below market value in hopes conditions will improve before closing day. If it does, no one knows any better, but if it doesn't, he'll probably mention something about a new rate maybe five minutes before you're due to sign the papers. Do whatever you can to lock in the rates the broker offers you before the closing. If he seems hesitant to commit to anything, you should consider taking your business elsewhere.
You may be able to reduce or eliminate some of the listed fees by pursuing alternatives other than those suggested by the broker or his lender. Title insurance, for instance, can be purchased from many companies, but the lender or broker will usually suggest an "affiliated" title insurance firm, and most people will capitulate for the sake of convenience. Of course, it's more convenient for the lender / broker than anyone else, since he pockets the kickback culled from a grossly inflated fee. If you insist on signing with another title insurer, however, he'll give in pretty quickly, since that kickback is only a fraction of what he makes on the mortgage altogether.
Be sure to check whether the mortgage agreement includes a prepayment penalty. A prepayment penalty is a surcharge for paying back all or part of the loan before the payment is due. The longer you take out a loan, the more interest accumulates for your creditor, so he stands to lose money if you pay him back too early. This is why many brokers slip a prepayment penalty clause into the paperwork. Still, most brokers will reduce or eliminate a prepayment penalty if you press the matter, rather than risk losing your business completely.
Ask if the mortgage broker is willing to sign on as your agent. An agent has many duties to his principal (you), including honesty and full disclosure. The mortgage broker does not work for you and has no more duty to tell you the truth and act in good faith than any store clerk would, unless he agrees to be your agent. Don’t be surprised if many brokers act like they have no idea what you’re talking about and make up some law that requires them to be fully honest, or some other excuse not to become liable to you as your agent.
Above all, when choosing a broker, stay on your guard and use common sense. If a small-time broker tries to sell you a drastically lower APR than his more established competitors, walk away. Even when dealing with a reputable broker who is offering industry standard rates, you should always be careful, given what's at stake. You might want to consider hiring a real estate lawyer to examine the documents before you sign them. It'll run you a couple hundred dollars beyond what you're already paying in fees and the down payment, but signing a contract you don't understand can cost you much more.
Just Because You Were Curious:
Brokers are not a necessary evil. Not all of them are evil, it's true, but none of them are necessary. If you deal directly with a lender and bypass the middleman, you run a much lower risk of an extortionate mark-up sneaking into your bill. Either way, don't run to a broker just because you're scared of numbers or don't want to read any paperwork. No matter whom you do business with, broker or lender, read everything carefully and calculate exactly how much you'll be paying, and when. If a broker can tell you're just using him as a substitute for caution and patience, he'll exploit you for everything he can take. Of course, even the most honest brokers and lenders will tell you it's best to sign with them, but never forget that the only person who can decide just what is best for you is you. {extended}
]]>Wedding Planners (Bridal Consultants): Wedded To Your Wallettag:servicesnitch.com,2006:index.php/site/index/1.232006-08-31T05:26:00Z2006-08-31T05:57:46Zadminpegr.technical@gmail.com
No matter how much or how little the planners end up planning, the profession is a lucrative one. Although some months are more popular than others, weddings are held all year round, so the wedding planner never finds any shortage of clientele. Furthermore, no one wants to come off as cheap when spending on his or her wedding, and the wallets open up at the slightest suggestion—something all planners are aware of, and many of them are willing to exploit.
Finally, because wedding planners are little more than glorified subcontractors for florists, caterers, decorators, and other wedding services, their living is rife with opportunities for kickbacks and corruption - all at the expense of the unsuspecting couple, their finances, and their dream day. So how can you get a wedding planner who actually considers your interests, all while leaving your wallet intact 'til death do you part?
What It Costs:
As with any service, the charge will vary from provider to provider. No couple wants a first-timer getting her feet wet in their punch bowl, so the more experience a planner has, the more she is disposed to charge. Some planners will micromanage down to the last detail; others will delegate many tasks and decisions to the couple and charge a fraction of the cost; others will do as much or as little as the couple wants and price their services accordingly. Another factor in the cost of hiring a wedding consultant is the number of attendees. A quiet, 30-guest ceremony will demand much less of an investment than a 300-guest gala blow-out.
Comparison shopping of wedding planners can be tricky, because some of them charge an hourly rate, others charge a flat fee, and others charge a percentage of the total wedding costs. For most planners, the hourly fee is a staggering $50 – $150 an hour. That means if a planner works just five hours a week for four weeks on your wedding, your bill can skyrocket to $3,000. A percentage-based fee, usually 10% – 15% of the grand total for the wedding, won't change the bottom line by very much. According to a 2000 Bride's Magazine survey, the cost for the average wedding in the United States is $19,000, netting the planner between $1,900 and $2,850…and what bride-to-be wants the average wedding? Furthermore, that was almost 10 years ago. The same study today would yield a higher number.
Most full-time wedding planners assist about forty couples every year and end up profiting $76,000 – $120,000. This already astronomical salary doesn't even include their income from extra services, such as printing out wedding invitations, or any kickbacks they may be pocketing. So while the final cost may vary depending on who the planner is and just how much planning you want, she will charge enough money to make more than many doctors and lawyers do.
The Wedding Planner Says:
"Whether you're interested in a simple, no-frills ceremony or a lavish celebration with all the works, it is my job to help you realize the wedding of your dreams. With every decision I make, I will always keep what you want in mind before everything else. I will work quickly and efficiently, wasting neither your time nor your money. I would never think of exploiting you at the most important time in your life. Working together, we will prepare the day you'll remember forever as the happiest day of your life."
The Snitch Says:
"Money may not be able to buy love, but to hear the wedding planner tell it, it can sure buy happiness. Every day couples spend as much or more on their wedding as they will on the down payment for their first home. Don't let the romanticism of their profession fool you; many people become wedding planners with the best of intentions but the bills mount up and sooner or later many wedding planners begin to see starry-eyed couples as dollar signs and suppliers (caterers, florists, etc.) as business partners. This is an industry where a wink and a smile are worth thousands of dollars and there are no licensing or educational requirements. Many wedding planners’ total experience comes down to having planned their own wedding and maybe helped with weddings or bridal showers for friends.
If the wedding planner pegs her fee at a percentage of the total cost, it is obviously in her best interest to sell you the best of everything. You will splurge on the most expensive flowers, decorations, and catering—whether you want any of it or not—even if she could get the same services for a lower price. Wedding planners are notorious for ignoring couples’ wishes and making commitments on behalf of the couple that they never would have agreed to had they been fully informed and then asked in advance.
Like anyone else paid by the hour, wedding planners who charge on an hourly basis have every incentive to delegate their responsibilities to “partner” vendors and inexperienced assistants and then charge for as many hours as the wedding planner believes the couple will be willing to pay for. Never mind that many couples and their families stay up at night worrying about how they will pay for the wedding and entrust the planner with the responsibility of making sure it all works out OK.
In short, many wedding planners purport to do things your way, but will only do it your way if it coincides with their way, which is whatever way they can make the most money off of you.
Obviously, flat-rate wedding planners are your best choice. But by no means does hiring one on a flat-rate basis get you out of the woods. Let’s talk a little bit more about what happens behind the scenes between bridal consultants and vendors.
A staple tactic of the profit-oriented planner is to mark up the prices of the subcontracting vendors and pocket the difference, even after you're already paying the planner by the hour. What makes it all the more devious is that this practice is almost impossible to detect. Any experienced wedding planner will have connections with a stable of florists, caterers, decorators, and so forth.
Because of all the business she delivers them, they offer her plum discounts in return, unknown and unadvertised to anyone else. The wedding planner will charge you full price and keep the discount as a kickback, knowing that you'd have no way of finding her out, even if you called up the vendors to confirm her prices on your own. Sometimes she will pass the discount on to you, but frequently it will be only a small percentage of what she’s getting, or she will have negotiated lesser service for a lower price so that it seems like she got you a great deal. Cash rebates are also common between vendors and wedding planners when the vendor is required to bill the couple directly."
Protecting Yourself:
Although the usual concerns of experience and cost have to be considered when selecting a wedding planner, you should also keep in mind just what you want in a wedding, and just what you want the wedding planner to do. Some wedding planners will defer to your decisions and act strictly as consultants, others will co-ordinate the entire day for you. If you and your intended just want someone to book entertainment for the reception, you're probably going to choose a different wedding planner than a couple who wants help picking out dresses and printing out invitations. Before signing onto the wedding planner's services, talk to her about just what you need, and ask her what she's willing and unwilling to do.
Before making any commitment, ask the planner about her formal training and experience. Ask whether she does this as a career or simply in her "spare time". A wedding day fraught with mishaps can get the most even-tempered of couples off to a rocky start to matrimonial bliss, so don't waste those hefty consultant fees on an amateur. Check whether the planner is a member of the Association of Bridal Consultants, the industry's most reputable trade group.
Ask the wedding planner about the discounts available to her. If she denies she has any then she's either skimming off the top or too inexperienced to waste a dime on. Every established planner will offer discounts for every facet of the wedding day celebration. Ask for a list of vendors with whom she has standing arrangements, then check out these vendors for yourself to see whether their services are what you're looking for.
As with any industry, always shop around before choosing a wedding planner. Be careful not to consider cost in isolation: a wedding planner might offer similar prices to one of her competitors, but she may buy from high-quality vendors while her competitor goes for bargain basement options and pockets the difference. Prices for the same vendor will often vary from planner to planner, too. One planner may have a longer business relationship or a higher customer volume and thus a more premium discount than another. Another common cause for price discrepancy is, of course, keeping the discount, as discussed above. Two planners might hold the same ten percent discount with a florist, but one of them may tell her clients the discount is five percent and slip the difference into her pocket.
Even at the most carefully planned wedding, something is bound to go wrong at the last minute, so be sure to ask the planner whether she will be on hand for the festivities from beginning to end, rather than just putting in a cameo appearance or not showing up at all. Ask whether the planner will assist in the set-up and tear-down of the décor.
Do everything possible to negotiate a flat fee with your wedding planner. With a flat fee, the planner has no incentive to drag her feet or waste your money. While a flat fee will always seem overwhelming on paper, remember that $150 an hour can spiral beyond the reach of anyone's budget very quickly, and, worse, it can have no limit. If you do consent to an hourly charge, agree on a strict maximum of hours. Similarly, if the planner insists on a percentage of the total wedding cost, cap the budget from the beginning.
Unless you live in the endless-summer climes of Florida, California, or Hawaii—where December can be a very popular wedding month—winter is typically the down season of the wedding industry. Late spring, summer, and early fall are obvious favorites for couples, but if your finances are more important to you than sunshine, consider a winter wedding. Because of the lower demand, you will have much more negotiating leverage in February than you would in June or September.
If you have the time, the persistence, and the patience, you may want to consider co-ordinating your own wedding. The competing advantages and disadvantages are obvious: you will enjoy complete control and you won't have to pay a middleman, but you'll have to do everything yourself. This can be taxing not only emotionally but financially, since you won't be privy to the many discounts that your local wedding planner has wrangled over the years.
The biggest disadvantage of the do-it-yourself wedding is, instead of having to deal with just one person who may try to rip you off, now you have dozens. Florists, caterers, decorators, and all the other wedding service providers are no more above exploiting you than wedding planners. If you do decide to forego a planner, be sure to comparison shop for every service, and read the fine print in every service contract you sign to determine exactly what is and isn't included in your purchase. Never tell anyone that you want their services for a wedding until you get the price: everyone knows people are willing to spend much more on weddings than on typical gatherings and will jack up their prices accordingly.
Leave the 24-karat diamond engagement ring at home, too; the more money they think you have, the more they'll pressure you into spending. Above all, whether you spring for a wedding planner or go it alone, never let anyone tell you what you want and what you don't want. You can't expect to have the wedding of your dreams if you let someone else do all the dreaming for you.
Just Because You Were Curious:
In a recent survey various vendors were called for pricing about an event: half were told that it was a wedding and half were not. Otherwise, the requests were identical. On average, catering services cost 20% more for weddings, floral design was 30% more, invitations were 15% more and limousine services were 15% more as well. Coincidence? I think not.
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]]>Optometrists / Eye Doctors: Seeing Profittag:servicesnitch.com,2006:index.php/site/index/1.212006-07-22T14:52:00Z2006-08-24T21:57:29Zadminpegr.technical@gmail.com
The eye care industry is divided into two subgroups: optometrists (eye doctors) and opticians (eyewear vendors). As with any booming industry, however, you'll find many enterprising operations that cater to all your eye care needs under one roof. Most eyewear outlets stable in-house optometrists for customers who need new or updated prescriptions, and most optometrists have "dispensary" units to sell you the frames and lenses the doctor insists you'll need. As convenient as this might seem for you, this is even more convenient for eye care outfit to bundle costs and rip you off from multiple angles. So how do you see through the industry's carefully disguised tricks and scams to get the right pair of glasses and the right care for your eyes at the right price?
What It Costs:
According to industry magazine 20/20, the average cost for eyeglasses in the United States is a staggering $244.59. While this expense may be covered in whole or in part by your health insurance, most plans do not cover it, and you will probably end up having to foot the entire bill yourself.
The two components of this cost are the frame and the lenses. The consumer has plenty of latitude in selecting a frame; name-brand designer models can cost as much as $500, while no-name, no-frills models run for less than $50. The cheaper the frame is, of course, the less durable it will be, and the ensuing repair and replacement costs can spiral far beyond the initial investment. You won't have as much leeway in choosing lenses, but you will be asked whether or not you want any optional add-on coatings. Every industry fattens its pockets by foisting "extras" on the unsuspecting consumer, and in the eye care business, those extras are lens coatings. Tints, ultraviolet filters, and scratch protectors are the most popular choices, and together these will run you anywhere from $30 to $100. While add-ons are only a fraction of the total cost of the eyeglasses, often they are where the vendors net the most profit.
This already absurd cost for eyeglasses does not include any fees for the optometrist, from whom you have to get the prescription in the first place. As with all medical practitioners, the price will vary wildly depending on the doctor and the service. The most popular service is the "comprehensive eye exam", though the definition of "comprehensive" changes from practice to practice, as does the cost, which is usually $50 – $100 per patient. Unlike eyeglasses, however, optometrist consultations are covered by many health insurance plans.
The Eye Care Specialists Say:
“As an optician, I sell eyewear at a fair, competitive price. I stock both designer and bargain frames and both traditional and advanced lenses, and I can tell you all about the fantastic lens upgrades I have available. I offer numerous promotions and discounts every year for my valued customers. Working together, you and I will find the pair of glasses that best fit your style, your vision needs, and your budget.”
“As an optometrist, I give all my patients the care and respect they deserve. I offer reasonable rates for all of my services, and I will help you determine which service is most appropriate for your needs. If I find you need a prescription, I can assist in selecting your frames and lenses from my dispensary, so you can make the decision with a doctor you trust and not have to put something as precious as your eyesight in the hands of an outsider.”
The Snitch Says:
“Your eyes may be the windows to your soul, but to eye care specialists, they're the windows to your wallet. Mark-up practices among opticians are much more drastic than they are among other industries. Bargain-basement import frames cost opticians as little as $5, but, a few ticks of the magic marker later, the frames sell for as much as $100. This is doubly deceptive: not only are you paying an extortionate mark-up, but, thanks to that high pricetag, you're also convinced you're getting durable, high-quality frames.
As for those ubiquitous '50% Off Sales Events', which seem to run 365 days a year at every eyewear vendor in the country, those are little more than shiny lures for a bait-and-switch. Look out for the asterisk, because, inevitably, the promotion applies to "select models only", that is, outdated frames their manufacturers no longer make replacement parts for. One loose screw later, you'll have to slink on back to the eyewear store and splurge on a whole new pair of glasses, while those half-off frames you got not too long ago will turn out to be worth far less than what you paid, even after the discount.
Sometimes, the frame discount is not only limited to certain frames, but to certain lenses as well. If you want to get those frames at half-off, you'll be told, you have to spring for the "deluxe" lenses, in other words, the most overpriced and marked-up lenses they have in their inventory. Didn't see that asterisk in the advertisement? Well, all the more reason you need the deluxe lenses! In the end, you're ripped off on the lenses much more than you save on the frames.
Even if the eyewear vendor claims there's no asterisk, no catch, no restriction on frames or lenses, every '50% Off Sales Event' warrants suspicion. Remember, standard industry practice is to mark up the frames hideously—usually up to 3 or 3.5 times the purchase price, sometimes even more—and then apply the 50% "discount". So even after "sale" price, you'll still pay perhaps twice as much as what the frames are actually worth.
A similar ruse is the ever-popular 'Buy One Frame, Get One Free!' ploy. As enticing as this sounds, the promotion will only apply to certain frames—the most expensive ones on the rack—and the free frame you get won't be the one you shelled out for, but a flimsy import job that isn't worth any more than $5.
Like all retail employees, eyewear vendors depend on sales commissions, but many of them only get a commission from the add-ons you choose, such as tints, UV protection, and scratch coating. Accordingly, these extras are sold for many times their actual value. Moreover, some newer lenses, such as hi-index and polycarbonate models, already have UV and scratch protection coatings from the manufacturer, but the sales clerk, fishing for a few extra dollars, will knowingly offer them to you as an "option", hoping you'll spend another $100 or so on something you've already paid for.
Optometrists are not above exploitation for the sake of profit in an increasingly competitive industry, either. Keep in mind that unlike ophthalmologists, who are medical doctors with all of the education and formal training to go with it, optometrists get a 4-year graduate degree from a college of optometry and then go to work – having earned a D.O. (doctorate of optometry.) The optometrist’s job is to diagnose vision problems and then sell you glasses or contacts. If you need surgery or if you have any kind of eye disease or disorder, you will require the services of an ophthalmologist.
Now optometrists know that most people unflinchingly trust the man in the white robe, and they'll capitalize on that trust. The meal ticket of the optometrist is to persuade his patients to submit to a "comprehensive" eye exam. Again, exactly what constitutes a "comprehensive" eye exam may vary, but any comprehensive eye exam will include some procedures that are not necessary for every patient at every visit. Of course, no matter how unnecessary you think it is, many optometrists will desperately try to convince you otherwise, since they make more money that way.
Nowadays, most doctors are businessmen, after all, and many operate on strict budget plans counting on an annual per-patient intake. If they don't meet that intake, their budget falls apart, and their practice along with it, so don't think the optometrist will sit back and let you choose the most economical exam available without urging you to reconsider.
Since most optometrists double as opticians, many of them will further abuse the doctor-patient relationship to pressure you into spending hundreds of extra dollars at their dispensary. Remember, you can't always trust your local optometrist more than your local eyewear chainstore just because he has a few more degrees on his wall. Doctors are suave, calculating types; they know most people won't even hesitate to lay down twice or three times as much money as they had planned, simply because their doctor told them it was in their 'best interest'."
Protecting Yourself:
If you're in the market for a new pair of eyeglasses, you're probably going to have to spend at least a hundred dollars, which is too much money for anyone to spend hastily. As always, you must shop around. You're sure to find high prices in many places, but, given the intense competitiveness of the industry, you have a strong chance of finding a reasonable bargain somewhere in your area.
The first thing to consider is that any retail dealer in glasses makes money either by doing a tremendous volume of business at a low profit margin and offering little in the way of service, or by selling fewer pairs at a premium but offering superior service, more delicate frames (that will require more free repair service), a nicer store, etc. So know what you want and select your store accordingly. To buy solid, sturdy, old-fashioned glasses at a premium dealer would just be stupid since you don’t need the extra service.
Similarly, buying glasses at the mall seems like a poor idea because you would get the worst of both worlds. Their rent is huge so they have to sell lots of standard glasses for top prices to make a profit!
As with any service, do not be pressured into lavishing hundreds of dollars on "extras" you didn't anticipate buying before you walked through the door. On the other hand, if you are sure you want add-ons, be aware that they are often the only negotiable component of the eyewear purchase. Don't be afraid to ask if you can get a discount on multiple add-ons. Since salesmen depend on the commission, many will readily accept any reasonable offer you make, once they know you're too smart to cave into the list price.
One easy way to determine what sort of frames and lenses you'll need is to check your prescription or ask your doctor for your sphere. The sphere is a numeric index designating the degree of correction needed; each eye its own sphere. If the sphere for both of your eyes is small—between -2.50 and 2.50—any frame will work just fine, and you won't require any hi-index lenses, so don't let any commission-hungry clerk tell you otherwise.
Hi-index lenses are a new development, and, like all new developments, expensive, but for people with severely impaired vision, they can be essential. As their name suggests, hi-index lenses have higher indices of refraction than traditional lenses, which means they can correct vision to the same degree as a much thicker traditional lens. If you and your doctor decide a hi-index lens is the best alternative for you, be sure your optician gives you what you pay for. He might try to slip you hi-index lenses only slightly more powerful—but much more expensive—than traditional ones. Be sure to ask specifically for hi-index lenses with a 1.66 degree of refraction.
If you have the option, consider polycarbonates instead of hi-index lenses. Polycarbonate lenses are thinner and lighter than traditional ones, but they're also cheaper than hi-index models, which offer the same benefits. Many people are unaware of the difference, however, and some unscrupulous eyewear vendors exploit this by charging the same amount for hi-index lenses as for cheaper polycarbonates. Ask for the prices on all types of lenses available before you tell the optician just what you want.
When making an appointment with your local optometrist, do not consent to a comprehensive exam if you know you only need an intermediate one. Before you commit to anything, ask exactly what constitutes a comprehensive exam and what other options are available. If you wear contact lenses, know that many optometrists will bundle a "contact lens evaluation fee" into your bill even for a routine check-up, so always ask whether you will be assessed such a charge before you schedule an appointment.
Buying glasses online is fraught with dangers to the consumer and is not a good idea. Due to fraud or incompetence you might be sent the wrong lenses or frames, discontinued frames (or nothing at all), or broken glasses and then get hassled as you look for an optician to fit them for you when they arrive and to repair them when they break. If you do want to buy online you just have to get your prescription from the optometrist, fax it to the online dealer you’ve selected and then pick a frame you like from their online catalog and hope for the best.
Just Because You Were Curious:
Selling glasses is a profitable business. Your local optometrist / optician grosses at least $500,000 a year if he’s earning the average in this industry, and very well might make over $1,000,000. Only a portion of this, however, will go into his bank account. Usually around 60% - 70% of the proceeds go towards leasing an office, maintaining a staff, financing equipment, and stocking a dispensary.
The more an optometrist invests in these expenses—that is, the higher quality service he wants to provide—the more he'll have to gross if he wants to make the same profit as the optometrist in the run-down office with one bumbling receptionist on staff. The only way he can recoup that difference, however, is to charge his patients / customers more.
Optometrists who follow a "low gross/high net" approach will boast much lower fees than those who stick to a "high gross/high net" model, but their service will be drastically inferior. Not all optometrists are ripping you off just because they charge higher prices than their competitors. As with any other service, you have to balance concerns of both quality and cost when choosing an optometrist. Remember, however, that while better service necessitates higher prices, higher prices don't always necessitate better service.
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]]>Corporate / Business Lawyers: Passing Your Bucktag:servicesnitch.com,2006:index.php/site/index/1.202006-07-20T16:37:01Z2006-07-21T20:34:58Zadminpegr.technical@gmail.com
This article will explain how to get top legal representation for a much better price than your colleagues are paying. It will also cover how to establish yourself as the boss right at the beginning, and how to maintain the balance of decision-making power in your favor.
What It Costs:
There are two kinds of assistance that one might receive from a corporate law firm – transactional work and litigation. Transactional work involves such things as buy-sell agreements, advice for managers and directors and restructuring of the corporate form.
How and what you pay for transactional work really depends on what you need. If you need something simple and straight-forward, such as forming a corporation, the lawyer will usually give you a flat fee of a few hundred to a few thousand dollars, depending on the complexity of the job. If you need advice on a one-time basis, the lawyer will charge you an hourly rate for that. An experienced corporate lawyer will generally charge between $250 and $450 per hour, but if you call a big firm in New York or California you could pay a much higher hourly rate. On the other side of the scale, if you find a solo practitioner who just left a big firm and is trying to start his/her own practice, you could pay $150 to $200 per hour for a great lawyer.
If you run a medium-sized or large company, you may need advice on a regular basis. Issues arise regarding products liability, intellectual property, employee liability and compensation issues, etc. Under this circumstance you might do something known as keeping a lawyer on retainer. This works in one of two ways, depending on how regularly you will need legal assistance. If your need is somewhat infrequent, you put down a few thousand dollars to ensure the lawyer’s availability and good-will. When you get advice, the lawyer just charges his time against the retainer.
The size of the retainer depends on the hourly fee – the higher the hourly fee, the higher the retainer will be. A small firm will ask for two or three thousand dollars. A larger firm could ask for quite a bit more.
You might ask why you should give over a retainer when you know that the lawyer will be available to answer your questions, anyway, and that the lawyer will happily bill you. The answer is that you should try to avoid it and work with a lawyer who will just bill you on a monthly basis, but because retainers are traditional, you’ll find that many experienced lawyers simply will not work with you until you give a retainer. So you may find someone you like and just have no choice in the issue.
If your need for transactional legal services is substantial, then you can negotiate a flat-rate monthly retainer agreement. Under this system, you pay a set sum each month (or whatever time period you agree on) and the lawyer will provide you with whatever services are covered under the retainer agreement whenever you need it, without billing you for anything over the retainer (except for out-of-pocket fees and other special costs.)
The cost of this kind of arrangement depends on how much work the law firm will need to do for you and how expensive the firm is. $10,000 to $15,000 per month is about average for this kind of arrangement, although larger companies definitely spend quite a bit more than this. The problem in the legal industry is that oftentimes you really want to work with one lawyer or firm that has great knowledge, experience and/or connections in your industry and so you’re going to wind up spending more money than you would like to.
If you’re considering corporate litigation, calculating your investment can be a bit more complex. First, you will have to pay all of the legal fees that you incur. You must also consider, however, the consequence of the litigation: the settlement or judgment. Whether you are pursuing a multimillion dollar claim or fending one off, you cannot consider your corporate lawyer's fees in isolation.
Unsurprisingly, corporate lawyers exploit this arrangement by forever insisting that the more your company invests in legal fees, the less net cost you'll sustain at the completion of the case. (Or, alternatively, the more net profit you will collect.) This is only partially true: your hopes of winning are bleak if you skimp on every cost, but on the other hand, no investment, no matter how expensive, will ever guarantee you more profit or less loss.
The legal fees themselves depend on the attorney you choose, the firm he works for, and the case you are pursuing. At a minimum, corporate law firms will charge $250 an hour; even if you agree on a flat charge instead of an hourly fee, the cost will average at least this much. The most exclusive names in the business charge upwards of $800 an hour. While some of that price tag goes towards the lawyer's experience and expertise, much of it is for the firm's reputation alone.
The biggest sting involved with litigation is the retainer fee. Commercial litigation never, ever costs less than $30,000 and frequently costs well into the hundreds of thousands, often in the millions for large cases. If it’s a very small case that is likely to settle immediately, your retainer will be around $10,000. If the case has any merit, your retainer will be no less than $25,000. Please see the ServiceSnitch article about divorce lawyers, which goes into great detail about how attorneys profit through litigation and how they make sure that you never see your retainer money again.
The Corporate Lawyer Says:
"Our clients demand results, and we deliver them swiftly and favorably. We will assign our top lawyers to you and dedicate every resource we have available to your project. We will conduct any research necessary and devise a detailed strategy for handling your case. We will never waste your hard-earned money through inefficiency or incompetence, and will promptly deliver our bills as scheduled. Any investment you choose to make in us will be worth it, because we will fight to save you millions of dollars and preserve your company's good name to the end."
The Snitch Says:
"One of a corporate law firm's purposes—often explicitly stated—is to shake as much money out of your opponent as possible. Nonetheless, the firm won't mind shaking you up a bit, either. The corporate law firm will entice your business by dangling the names of their senior partners during initial contact, and then, after you've signed on, shuffle your work into the hands of inexperienced new lawyers without your knowledge or your consent.
If you question the situation, the corporate lawyer will explain that you don’t want a partner doing the rote work for $500 per hour when he could just oversee the work of intelligent associate attorneys (“associates”) who get paid far less. And if he did that in good faith, he would be completely right. The problem is that he will deliberately fail to provide his associates with sufficient guidance, obligating them to spend as much time as possible researching issues that have been researched at his request dozens of times in the recent past for other clients.
Associates are required to bill for thousands of hours per year just to keep their jobs. Their bonuses and promotion opportunities depend on billing well over the minimum. Therefore, associates of all levels work together to help each other obtain “billable hours” at your expense. An associate can’t justify spending 12 hours researching a basic issue that the firm claims to specialize in, so that associate will spend 5 hours on it and then send it to a litigation associate who glances at it and makes a few changes and bills for an hour. It then might go to a tax associate, associates specializing in the law of various states or countries and anybody else that the first associate thinks he can do a favor for by helping them to rack up some “billables.” Those same people will do the same thing for the first associate – sending memos and legal documents to him to review for an hour or two just to help him rack up hours. Meanwhile, you’re paying for 12 hours of work on something that the firm already has in its database from the last client who had the same issue.
You should be especially suspicious of internal research reports written on your behalf – known in the legal industry as memoranda of law. These are formal documents involving lots of review and are frequently written just to rack up hours for the firm, for the associate writing the memo and for all the free-riders who it is sent to for “review.” Usually the firm already has in its database a memorandum just like it from previous clients, and usually just a few notes written on a pad or in a simple email would have achieved the same goal.
In the context of litigation, because firms get paid by the hour, they're never too concerned if your case drags on a little longer than expected, and they might even do some dragging themselves, despite the emotional and financial toll prolonged litigation will take on you and your colleagues. The corporate law firm might even willfully bypass an ideal settlement in favor of years of briefs, filings, depositions, and, of course, fees.
Of course, the corporate lawyer will try to prolong sending you bills until there has been some good news to sugarcoat it with – either a positive break in your case or some conclusive evidence that you can legally do whatever you are trying to do if the situation is transactional in nature.
You might ask yourself why corporate lawyers would engage in these kinds of expensive, deceptive practices, knowing that eventually clients will discover the duplicity and fire them. The reason is that most corporate decision-makers don’t realize that they’re being gypped, and even if they do, they accept it as a necessary evil. After all, doesn’t every lawyer operate that way? Additionally, if the firm does a good job the client may take the position that the lawyer’s services are expensive but valuable and worth the money.
The other possibility is that litigation is involved and the cost has become so enormous that the client has run out of funds, or that the client just lost the case outright. In such a circumstance it is highly unlikely that the client is going to avail itself of that firm’s services again, anyway. If the firm wins the case then the client will likely feel that the firm did a great job and was worth the price, since everyone loves winning after a grueling fight."
Protecting Yourself:
As obvious as this seems, too many companies fail to realize that you have to select a corporate lawyer on the same standards as you would for any other service: quality and price. You will find droves of low-quality, high-priced corporate lawyers, but, if you're persistent enough, you're sure to uncover high-quality, reasonably priced ones as well. As with other services, you must shop around.
Unlike other services, however, choosing the best corporate lawyer is more complex than simply choosing the lowest rates. Many cut-rate firms will lure you in with bargain prices, only to waste months and years on your case through incompetence or greed, and you'll end up paying far more than you would have to a pricier but more efficient firm. While you can always switch firms during litigation—and, if a firm fails to deliver results, you should—you will waste thousands of hours and tens of thousands of dollars in doing so. The best way to avoid this is to hire right the first time, and establish proper ground rules right at the beginning.
When conducting your search, however, you shouldn't really choose a firm, but individual lawyers instead. After all, the lawyers are the ones with the experience, the know-how, and the fighting spirit to favorably resolve your case, not the firm itself. Corporate law firms rub their hands in glee whenever you're forced to add more and more lawyers to your team, but if the first lawyer on your case is competent and self-sufficient, you can let him see your case through to completion on his own.
Don't restrict your search to lawyers at marquee firms. Big firms have the advantage of name-brand reputation, but not only are they are more expensive, they also cannot afford the individual attention to each case smaller firms can. The larger the firm, the more cases they will have on their books, and yours is apt to get lost in the shuffle until a major problem arises, by which point the time for action may have already passed. Whether you choose a big firm or small firm, your case will be handled by a small team of lawyers and assistants, so you will not boost your manpower by selecting a larger firm.
After narrowing your search to a handful of lawyers and firms, ask your candidates about their budget requirements for your project. Ask how long they think the case will last, how they plan to approach the case, and what they expect the outcome will be. Since you haven't hired the candidate yet and he knows you're interviewing others, you hold all the leverage; if you demand a budget up front, he will be forced to give a competitive estimate if he wants to land your case, and he and his firm will be accountable for that figure later on. If the candidate is not forthcoming about his budget or his strategy, you should look elsewhere. You'll want to hire an experienced lawyer, and lawyers who have handled similar cases in the past will know beforehand how to attack your case, how long it will last, and how much it will cost.
You have two options for negotiating a budget: a set payment for each task and an hourly rate. The first requires more work to draft; you and the firm will have to outline every step, every contingency, and every goal of the process and agree on a payment for each. The resulting advantages are flexibility and immediate accountability. If unanticipated difficulties arise, you can always add new tasks to your plan. If you're paying by the hour, on the other hand, all you can do is pray these new problems go away as quickly as possible. Moreover, if you pay by task, you know exactly how your money is being spent every time you get the bill. While a per-hour budget plan can be hammered out instantly, you'll have little concrete idea of what you're getting charged for later, and your lawyer has more incentive to dally with your case.
When you are ready to commit to a lawyer, you must insist on a retention agreement, the pre-nup of the legal world. In the retention agreement, you should outline your fee schedule and what expenses are and are not permitted. Specify consequences, such as deferred payment, for exceeding a budget cap. Set the goals you expect your lawyer to meet in writing. Be wary of any pre-prepared retention agreements the firm suggests you accept in lieu of your own; these form agreements are typically rife with extortionate late fee assignments and ludicrous escape clauses that permit your lawyer to leave a case before trial for no reason.
When you begin litigation, monitor your case's progress at every stage. Demand consistent feedback from the lawyer or lawyers on your team. Make sure the firm isn't foisting the bait-and-switch trick on your company; don't let your case be delegated to a less qualified or less talented lawyer than the one you expected would handle it. Consult with your lawyer in person regularly, even if you are charged for it. The better he and his colleagues understand your needs and concerns, the more efficiently your case will be addressed.
Although you should refuse to accept too little attention paid to your case, too much attention can be just as unfavorable. Willful over-handling of a case is so widespread in the legal world that it has its own name: "gold-plating". Lawyers who pore over every internal memo and waste hours drafting and revising routine correspondence will launch your bill into the stratosphere. One of the favorite tricks in the corporate lawyer's arsenal is to draw out the "discovery", or research period. The corporate lawyer will linger over the discovery until you discover you've blown thousands of dollars for him to do nothing.
Even the most hardened corporate execs are intimidated by lawyers, with their fancy degrees and their slippery doublespeak. Too many will cower in fear before their lawyer, never openly questioning what he does. Always remember, however, since you're paying him tens of thousands of dollars a week, you have the right to make any suggestion or raise any concern that you want to. If your corporate lawyer insists a task is necessary that you think is just a waste of time and money, demand a detailed rationale for his position.
If you ever notice a discrepancy in your bill, don't ignore it. Call the firm and ask for an exhaustive run-through of your bill, one charge at a time. Corporate law firms want to keep your lucrative business in their pockets for years to come, and they know that if you're dissatisfied with the bills and your concerns are not allayed, you may abandon them before the week is out. Even if the dispute is only over a small fraction of the charge, the corporate law firm may discount your bill up to 25% if your concern is legitimate—and sometimes, even if it's not—just to keep you happy, because a happy client is a loyal client.
Though all companies have to hire outside specialists from time to time, most large corporations maintain a stable of in-house lawyers as well. If you work for a co