July 24, 2017

What Is Fee-Only Automotive Advising?

THE DIFFERENCE BETWEEN A FIDUCIARY AND A BROKER

It’s a common question: “Dave, what do you mean by fee-only consulting?”

“How are you different from a broker, dealer salesperson, my buddy who owns a restoration company, or my nephew who’s a certified Gold Meister?”

At Precision Automotive Group, we’re committed to providing fully unbiased, objective automotive advice to clients. The vast majority of the automotive industry is compensated when a transaction takes place: A car is bought or sold; or it is insured, raced, fixed, restored, painted or consigned with the auction house. And most of the industry is compensated on the net, book time, CSI numbers or hefty bonuses once a quota is met. It’s no different in the collector car marketplace. Feel free to fact check us on this one – the next time your car gal calls, see if a transaction is not on their radar screen.

Although that’s the way much of our industry functions – and it won’t change — it is also why I’ve refused to ever “broker” a car. What if the wiser decision is not to sell that car? Now, not all brokers are bad people. Some of them may even be acting in your best interest and giving you what they feel is unbiased advice. But the fee-only compensation structure ensures the advice you’re receiving has your best interests at heart.

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THE FEE-ONLY COMPENSATION APPROACH
ALLOWS US TO BE YOUR FIDUCIARY,
A TRUSTED ADVISOR, WHO MIGHT ADVISE YOU TO BUY,
OR NOT TO BUY.
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Fee-Only Automotive Consulting: Objective and Transparent

In order to ensure that we achieve complete objectivity, we choose to advise our clients on a fee-only compensation basis. First, this means we only receive compensation from our clients. There are no commissions, no referral fees, no kickbacks, no brokerage fees — no hidden fees or other payments of any kind. We don’t work for anyone but you.

And second, we decide on the flat compensation amount with you, our client, during a face-to-face consultation and our “discovery” meeting that determines the scope of the assignment, and the amount of time the engagement will require. The agreed-upon amount never changes without your prior approval, so you know our team has your best interests in mind all the time.

Assignments: As Varied as Our Clients

So what’s the typical scope for an assignment? It can be one or two activities, such as finding the best-priced vehicle, negotiating, and pointing you to the area dealer to wrap up the deal. Or, much more often, PAG is involved in multiple steps: Finding your prize, inspecting it before purchase/or auction, negotiating to your price point, managing delivery arrangements, and ensuring it is ready for the road the first time you drive it. Thus, our projects can occupy four hours or 40.

Another typical engagement is assessing, repairing/detailing, marketing effectively – auction versus private sale – a vehicle that’s part of an estate, or one from your collection that you are ready to replace.

Our primary job is to advocate for you and to ensure you receive the best possible advice — advice that’s not only personalized to your unique needs and situation, but researched and factual as well. The fee-only compensation approach allows us to be your fiduciary, a trusted advisor, who might advise you to buy, or not to buy. Or not to sell at the present time.

To Sell or Not To Sell

Two years ago, we had a client interested in buying another 1989 Porsche 911. His thought process made sense: “My other 930 has tripled in value, so why not buy another one and do it again?” The problem was that the market was highly inflated and had currently peaked. I didn’t advocate selling his current prize, but I did make him aware that whatever 930, 964 or 993 we’re talking about would be worth half of the current market in 18 months.

Last, don’t be limited by geographic constraints of your metro area. Often, the best car, restorer, auction house or collector lives outside your geographic region. So don’t settle for what’s available to you at your primary residence. Our network ensures we find the best solution for your engagement regardless of geographic parameters.

So here’s the takeaway: Understand the motivations and pricing approach of the organization or person you work with. It’s not rocket science, it’s just the marketplace. PAG is very unique.

Next Time: ‘Middle Age’ – The Hidden Costs of Exotic Car Ownership

In my next column, I will discuss maintaining, repairing and refreshing, the costs involved, and how that may alter the next exotic you acquire.

Written By:  Dave Bentson ~ Principal ~ Precision Automotive Group

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