The Successful Investor managing director Michael Sloan issued a statement yesterday saying clients are not getting the advice they need from professional advisers when discussing investment properties and advisers are letting the “tail wag the dog”.
“Most accountants and financial planners don’t know enough about investing in property to assist their clients,” said Mr Sloan.
“They leave the decision to the client, and many clients are getting it wrong.”
Mr Sloan also cautioned that with any purchase, the rule of ‘buyer beware’ applies to selecting suitable investment property advisers, warning advisers to be wary of companies with “unscrupulous operators” before recommending them to clients.
Mr Sloan also said advisers should indicate to clients that standard “residential property in a standard residential area” is the safest investment option.
“Investors should stay away from student accommodation, buying in the US, holiday accommodation and other niche properties,” said Mr Sloan.
“Unless they are experienced in property they should also stay away from commercial property, because even well-placed commercial property can lie vacant for months, putting a strain on finances,” he said.
Paul, I empathise that the industry at large makes it difficult for advisers to incorporate property within their scope of advice but why can’t advisers introduce a trusted 3rd party specialising in property to align and co-ordinate their advice within the parameters set by the planner? In principle, how would that different from liaising with an accountant, lender and lawyer to provide a holistic outcome? SMSF and LRBAs would seem a classic example?
Point taken Hank but I’m sure you get Michael’s message. There’s plenty of bleating, quite rightly, from accountants and planners, et al about the less scrupulous activities in the direct property space but then there seems to be very little, if any, effort made by those same parties to introduce the quality of property advice to meet their clients’ needs. If, as you say, the client is the dog then what’s happening is that they’re going to their advisers to be fed good advice on ALL their wealth goals and strategies including property but, for the large part, these advisers are simply shrugging their shoulders (and their responsibility) and pointing them to the door with little more than “go fetch”. No advice is surely bad advice. The opportunity then is for ethical, like-minded professionals to work together for the client’s good. It’s not hard but I’m constantly perplexed as to why key advice providers ignore the need and stark opportunity to be even more valuable to their clients.
I would argue with Mr Sloan that accountants/licensed advisers generally ‘know plenty’ about investing in property but are hamstrung in providing specific advice as their PI insurance wont cover them/dealer group precludes it. That unfortunately leaves these people to their own devices, bank loans staff or worse, property agents/spruikers masquerading as ‘advisers’, with no ongoing responsibility for their ‘advice’.
I think you’ll find the client is the dog and not the tail??