Getting a Hamburger: Expectations of Your Business Relationships By: Gabriel PotterMBA, AIFA® 2016.01.27

Imagine you have a hamburger in a paper bag for lunch, and you would like some french fries to go with your hamburger.

You go to a local McDonalds drive-thru and say, “I’d like to buy a small fry.”  You pay them $1.20 for a value-sized fries, get their paper bag from the window, and drive off.  Once you get to the street, you realize that you did not get any fries in the bag – just an empty French-fry carton. 

That’s annoying, but it happens often enough to be an excusable error.   You drive back to the drive-thru window and say, “Hi, I did not get any fries.  Could I get some fries please?”, while handing them the empty French fry carton.  At the drive-thru window, they say, “we cannot accept this French fry box.  If you’d like to get some French fries in this box, could you please come inside?”  Again, you think this is a little strange, but you park your car and walk into the McDonalds.  Holding your open fry container, the cashier at the check-out says, “No, you don’t understand.  We can’t touch a used fry container.  Can you come back behind the counter and use our deep fryer to collect the fries yourself?”

Now, it’s really strange.   You counter back, “Look, if you guys are not able to make some fries, that is fine.  I’ll go elsewhere; no big deal.  Just give me my money back and I’ll go get fries at Wendy’s down the street.”

Fearful of losing your money, a manager gets in touch with the cashier and says, “we’re sorry – just wait here a moment.”  The manager takes the empty bags from your hands – filled with the hamburger and the empty fry carton.  You feel relieved that you didn’t have to go play with a dangerous deep fryer. You wait for a while until the manager comes back.

The manager comes back smiling and hands you another paper bag.  Smiling, the manager says, “Here you go!  We checked and everything is here:  your original burger is here and your fries are here.”  Finally!  You head back out to your car and, opening your bag, notice that the fries are there, but now your burger is gone.

At this point, you are understandably confused and perhaps a little irritated.  So you go back to the cashier, flag down the manager and say, “you took my burger, can I have it back please?”  The manager says, “There was a problem with your original burger, so we switched the sesame seed bun, but we did give it back to you in the paper bag.”  Irritated, you open your paper bag – showing it to the manager – indicating that there is no burger left. 

The manager leaves for a while, speaks with his fry cook and comes back, shaking his head sadly.  “I’m sorry.  I guess the cooks in the back did NOT actually get your burger and fries.  Your burger was getting old and we messed it up a bit while we were getting your fries ready, and putting your lunch back in the bag.  It was an old, soggy burger and re-wrapping it to go back in the bag just messed it up while we were putting your order together.”

It’s true that the hamburger wasn’t freshly made.  The hamburger was $4, and you got it as a carry-out from the night before.  Still, you were perfectly satisfied with that hamburger.  You just wanted some fresh fries to go with it.

The manager looks brightly at you and says, “Not to worry!  I will sell you a fresh burger and fries combination for $5.  I’ll even give you a discount for 50 cents.”  Disappointed, you say to the manager, “look, you ruined my hamburger, and you want me to buy another one?  Besides, I already paid $1.20 for fries.”

The manager points out his fry cooks have walked back and forth a couple of times trying to fill your lunch order.  And really it’s your fault for asking us to re-wrap a soggy day-old burger in the first place.  “What should have happened is we should have never taken your order in the first place,” he notes.

Silly story, right?  This is essentially what happened to me at a local garage door repair place, with a few obvious changes.  Everything that happened in the hamburger story happened with that shop, in an analogous way.   I had a functioning door opener, but the key-lock wouldn’t open in cold weather, so I asked for a repair.  The shop came out to my house, replaced a few things, asked me to pull out the wiring of my garage, told me (incorrectly) it was fixed simply by replacing a battery, and eventually had to admit that they broke my old, but functional garage door opener.  (Oh, and the prices are $100 to $1 – of course.)

So why am I bringing this up now?  Am I just abusing my position as a blog author to rant about my irritation about a local repair shop?  I admit, that’s at least a little true.  There is another point I’m trying to make about expectations of service.

My silly analogy about getting lunch from a fast food chain isn’t perfect.  Most people have a very high expectation of getting a hamburger from a fast food place while getting an item repaired is naturally going to have a higher proportion of failure. 

More relevant to this blog, the question is what is your expectation from your consultant?  Does your consultant accept payment while you and your committee accept whatever output they generate?   If your consultant is ostensibly a “service” provider, they, ipso facto, have to provide a valued service.  So, what do you expect from your consultant?  If your idea of a “service” is outsized returns, then the past year might have been a little painful for your investment committee.  Consultants and investment managers are still pulled by the tides of market forces and their ability to swim against the tide and create positive risk-adjusted return, the majority of your return profile is still determined by the flow of the market.

So, our advice is to be wary of consultants whose service proposition to you is largely made by allusions of outsized returns.  A consultant cannot and should not set up that expectation.  On the other hand, fiduciary education, reduced liability, project management, and cost reduction are absolutely in the purview of good investment consultants and fiduciary consultants.  

Gabriel Potter

Gabriel is a Senior Investment Research Associate at Westminster Consulting, where he is responsible for designing strategic asset allocations and conducts proprietary market research.

An avid writer, Gabriel manages the firm’s blog and has been published in the Journal of Compensation and Benefits,...

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