Property investment advice

Many so-called property investment advisors seeking to create a property investment businesses reference to the more visible laws and take up real estate business standards.  Real estate law defines two roles, a buyer’s agent and a vendor’s agent. Many of the additional services provided with these basic roles are created as a sales pitch rather than to support sound professional advice.

With no regulating authority to ask, investors have been left confused as to the expertise of the person.  Many of them qualify potential help by asking the question, “How many investment properties do you have?”  This is like asking a doctor how many patients they see in a day without asking do they Medicare bulk bill or are they a specialist. 

What investors need to be asking is, ‘Does this person have the education and the experience to support theirprofessionalism?’ and, “Am I comfortable they can support my investment needs?”  If they discover they need more help where can they go?

1. Financial Planners

Property is not a regulated product and so financial planners are not able to work with direct and specific property.However the focus of financial planners is being changed by legislation.The draft legislation from the Future of Financial Planning (FOFA) group is due to pass parliament and be implemented by the 1st July 2012.This legislation supports client focussed, wealth creation.Financial planners will be required to consider direct property for their clients.Investors may be offered an in-house or out of house solution from a property investment group.

This provides a business opportunity as financial planners seek suitable referral partners to provide the direct property services.The issue is that ASIC regulation, AFSL licensing and professional indemnity insurance all require business standards that support the financial planning business environment.These standards are not readily found in the real estate sector which has a very different regulatory environment.

2. PIAA Accredited Advisors

PIAA has sought to support investors through the creation of a professional services sector.  These professionals have an educational qualification supporting strategy led, goal based property investment advice.  They belong to a professional association, the newly formed Property Investment Association of Australia [i] (PIAA) with the requirements of professional conduct.  They also have professional indemnity insurance.  This places them in the box seat to work with financial planners needing professional property services or to work independently for self directed clients.

There has been a recent marked increase in activity as property groups seek to align themselves with financial planners and gain additional leads.  However there is bound to be some grief as real estate business standards clash with the ASIC regulated Financial Planners.  Add to this the professional indemnity insurers will be trying to unravel non standardised business methods and the associated risks to their Financial Planning clients.  Unfortunately the investor is often at the end of this queue and their investment results can be compromised with no recourse to professional indemnity insurance cover as real estate businesses are not covered for advice.

For more information about PIAA for professional and for investors go to www.piaa.asn.au



[i] The Property Investment Association of Australia has been created from the Property Investors Association of Australia.

The above information is supplied by the PIAA.
Disclaimer: while due care is taken, the viewpoints expressed by sponsors do not necessarily reflect the opinions of Your Investment Property.

 

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