Selecting the right financial advisor and broker
But as we all know, there are good and bad operators out there so how do you know who’s going to offer you the best advice? Doing your homework and asking questions is usually the best and only way to sort the wheat from the chaff. Three main areas you should investigate are as follows:
Ensure your advisors have the right qualifications if they’re available. Financial advisors and Finance Brokers are required to be licensed with the Australian Securities and Investments Commission (ASIC). Accountants should be registered with a professional body and the same goes for Buyers’ Agents who should have a real estate registration certificate and ideally be members of the Real Estate Institute of WA and Property Investment Professionals Australia (PIPA).
A quality of a good advisor is one that is unbiased. While there are many points to consider in evaluating this, a key one is looking at how the advisor is getting paid. An unbiased advisor should have no problem in disclosing exactly how they are remunerated. If they are receiving remuneration from other sources rather than you directly, tread carefully as they may be inclined to push only specific products or services onto you for which they are remunerated for (as opposed to ones that may be better suited to you or better performing, but for which they don’t receive commissions from).
A mortgage broker usually receives commissions from the banks but a reputable one will have no problem in disclosing the fees they receive before you engage them. A buyers’ agent on the other hand, should only ever be paid by you. There are many operators out there posing as buyers’ agents offering their services for free, but in fact they are actually paid by developers to push their specific products to investors like you. Financial Advisors and Accountants should also, in almost all instances, be paid by you direct and not a third party.
It goes without saying that many years of experience and plenty of happy customers is generally a good sign. But what about experience specifically in property investing? You mustn’t forget that property is not yet an ASIC regulated product. This means those purporting to offer advice with regards to it are not yet regulated by law and do not legally have to take responsibility for the advice they provide. This leaves the door wide open for shonky operators to step in to make a quick buck. Despite what some believe, even Financial Advisors do not necessarily have the know-how to advise in relation to property investing. In fact, Financial Advisors tend to only provide advice in relation to ASIC regulated products as it is safer for them, hence why they may shy away from recommending property as an investment vehicle. It may perhaps be best therefore to ensure that whatever advisor you choose, they have a lot of experience with property investing and can substantiate it.