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.”
Real estate agents are turned off providing licensed, insured advice. They would much rather continue providing unlicensed advice the same way they always have, because ASIC lets them.
The very minute a real estate agent opens their mouth and states “this property will be a great investment”..
the line has been crossed and they are now giving financial advice without any form of analysis, accreditation, documentation and accountability if the value of that property plummets 18 months after it has been purchased as an investment.
If a client comes to a Financial Planner with $1mill to invest, we all know the intricate analysis and process that needs to be followed in order to be able to justify the most appropriate strategy in the client’s best interest.
If the same client buys a $1mill investment property on the basis of an advertisement or verbal statement by an agent that it is a great investment, they are committing the same level of funds with no documented advice or justification.
Selling a property for the purpose of a personal, residential dwelling is one thing and selling property purely for the purpose of investment is another entirely.
IN the regional papers the local real estate agents place adds in saying “this property can be your superannuation” or “buy this property for your retirement planning”. When I first saw them I sent them to ASIC, and you know what has happened – nothing
Why don’t real estate agents just be really good at what they do, which is selling property, and leave the financial advice to a qualified advisor instead of trying to be a jack of all trades and master of none!
It’s pathetic, if I purchased a property and the agent started talking to me about super and insurance etc. I would laugh at him and walk out.
This is just as bad as shopping centres trying to sell life insurance – give me a break!
PIAA has business reasonable PI Insurance for property investment advice for suitable graduates of their educational qualification.