Real estate agents turned off advice
While there is some convergence between the real estate and financial advice sectors, many agents are deterred by the daunting prospect of attaining PI insurance, says an industry body.
In a communication to members, Real Estate Institute of Australia (REIA) CEO Amanda Lynch said relatively high insurance premiums had limited the number of agents seeking to become licensed advisers.
“When REIA spoke to the parliamentary committee, we detailed our knowledge of clusters of agents in certain areas, who had a dual role in also being a financial planner but that the cost of the personal indemnity insurance required to offer financial advice was a sufficient deterrent for most real estate agents,” she said.
However, she warned the trend was also flowing in reverse, with significant numbers of advisers attaining real estate qualifications, often from sub-standard institutions.
“On the flip-side, what has concerned REIA greatly is media reports that some financial advisers are seeking fast-tracked courses that offer real estate licences,” she said.
“These courses do not require attendants to sit any exams, are completed solely online and have a very suspicious 100 per cent success rate.”
The REIA confirmed it was working with the Australian Skills Quality Authority to address the issue of poor-quality real estate training.
The SMSF sector has been particularly vulnerable to poor-quality advice, Ms Lynch suggested.
“While we recognise that for the most part, few if any, real estate agents are involved in the promotion of SMSFs, some of our members report that there is increasing demand from accountants who managed SMSFs on behalf of trustees as well as vertically integrated organisations that approach agents seeking suitable properties,” she said.
“The current federal inquiry into Australia’s financial system is also concerned about the quality of information provided to SMSF operators as well as the fact that some people borrow to purchase property as an SMSF investment.”
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