Would You Hire a Handyman to Manage Your 401(k)?

Everyone knows the story.

You contribute a significant amount of money over several years to a 401(k), or buy stock in a growing new startup you read about. Then you hire someone a friend, family member, or maybe your real estate agent knows who's lease a home in the past and does a little part-time bookkeeping on the side to manage your new investment.

You know, someone who is “good with numbers.”

The part-time bookkeeper your friend recommended does an excellent job managing the investment you made—the investment you hope gets you through your retirement years, or helps pay for your child’s college education.

In the end you’ve spent as little money as possible by avoiding ever even knowing what it would cost to hire a professional, all the while watching your nest egg grow. You send the kids to the Ivy League schools you can now afford, and retire with your spouse on a sunny beach, perhaps on an island.

An island that you own.

Actually…that never happens.

No one ever does that.

Everyone understands that you hire a professional to help guide your personal financial strategies and investments. In fact, when it comes to financial investments, the law and regulatory bodies require you to work with and receive advice from professionals.

Unfortunately, too often property managers have to pick up the pieces after an investor has turned over the management of a property to their handyman.

Don’t get me wrong—we are not anti-handyman.

However, when it comes to managing your financial portfolio, people understand that there is a difference between executing the daily operations of managing your portfolio and providing strategy, guidance, and comprehensive management of your entire investment. 

In the world of property investment, the handyman plays an important role in the daily tasks required to maintain your physical property, but a handyman can’t provide the comprehensive property management services you need.

For example, a handyman typically can’t:

• Produce monthly and annual statements.
• Provide legal counsel on retainer to deal with complicated situations that arise, such as unauthorized occupants in the property, withholding rent due to a lack of repairs, security deposit disputes, evictions, HOA violations, and any other sticky situation that can have financial and legal consequences.
• Be available 24/7/365, unless he/she has a full office staff to support it.
• Properly document changes in the lease through an executed lease amendment.
• Provide adequate notice at lease termination in compliance with state statutes.
• Handle the security deposit claim process in compliance with state statutes.
• Maintain an “arm’s length” standard when authorizing repairs on the property.

That last point is especially relevant.

A handyman is incentivized to make repairs. It's how they get paid.

If you hire someone to oversee your investments - like a property manager - ensure they're incentivized to negotiate the best rates possible for vendors and handymen.