{"id":20031,"date":"2018-02-15T01:00:23","date_gmt":"2018-02-14T14:00:23","guid":{"rendered":"https:\/\/realestatetalk.com.au\/?p=20031"},"modified":"2018-02-15T01:00:23","modified_gmt":"2018-02-14T14:00:23","slug":"beware-the-two-hatted-advisor","status":"publish","type":"post","link":"https:\/\/channels.realty.com.au\/realtytalk\/beware-the-two-hatted-advisor\/","title":{"rendered":"Beware The Two-Hatted Advisor"},"content":{"rendered":"

In the old Dr Seuss story, The 500 Hats of Bartholomew Cubbins<\/em>, Bartholomew\u2019s one hat turns into a troublesome string of 500, raising the ire of the king and getting poor unsuspecting Bartholomew into all sorts of strife. Unsuspecting property investors can find themselves in all sorts of strife too from too many hats, but for them the trouble can come if their trusted advisors, who they turn to for mortgage, accounting or financial advice, start trying to wear the hat of a fully accredited property investment advisor\u2014and start spruiking property for their own personal gain.<\/strong>
\nProperty spruiking, where marketeers get massive rebates from developers for pushing properties onto unsuspecting investors, has existed in this country for decades. Over the last five or so years I have observed an alarming new approach to property sruiking which already has the potential to cause even more serious repercussions than the collective $1.5 billion which mum-and-dad investors lost in the Storm Financial collapse.
\nThe new Storm-in-waiting is in the form of mortgage brokers, accountants, financial planners, and so-called buyer\u2019s agents who are receiving between $10,000 and $50,000 each and every time they can convince one of their own trusting clients to buy a specific property. These service providers often have a reasonable reputation in their chosen field so the client\u2019s guard is down when the advisor starts talking up a specific property. There\u2019s no red flag screaming \u2018marketeer\u2019! But the Bartholomew & Associates of the world are no more qualified to give property investment advice than the local hairdresser. And it\u2019s property investors who are paying the price.\"\"<\/a>
\nDevelopers and salespeople are an integral part of every community. And, there is only so much that legislation can do to protect unsuspecting consumers from the rogue element which exists within every profession. But, successive federal governments have failed to address this issue. So, I applaud the Queensland State Government for agreeing to review real estate and financial advice regulations. I am not convinced that the root of the problem is fully understood though.
\nThe microscope needs to be focused on the alarming business practice being adopted by these two-hatted advisors. And, it would be grossly naive to think that the answer is to pass legislation to ensure that developer rebates are being disclosed!
\nJust ask anyone who lost their nest egg in the Storm collapse what sought of protection they received as a result of financial planners disclosing commissions on managed fund products. Answer, \u2018zero\u2019.
\nI would like to see laws passed so that any one at all who receives remuneration from the purchase or sale of property must hold a real estate license. A plumber who wants to also wear an electrician\u2019s hat must first complete the apprenticeship and obtain a license; the same should apply when a financial services business wants to suddenly earn a living out of promoting property.
\nJust like the FOFA legislation prohibits financial planners from receiving commission on managed funds, all forms of developer rebates need to be outlawed, too. It is hypocritical to suggest that any mortgage broker, accountant, or financial planner who is being remunerated via a developer rebate is acting in their client\u2019s best interests.
\nThe relationship between the consumer and (say) a mortgage broker is vastly different to a traditional property marketeer. The Bartholomew & Associates of the world are simply swapping their everyday hat with a property hat and then claiming that, out of the 9.7 million properties in the country, they (conveniently) have a list of the most suitable ones for their client \u2013 \u2018trust me\u2019.
\nReal estate engagement documentation needs to more clearly pronounce who you work for – buyer or seller. And, service providers must be paid by who they represent. I am aware of numerous so-called Buyer\u2019s Agents who receive remuneration from the vendor \u2013 rebates as high as $50,000 from new developer stock – who are they working for?
\nLegislators need to close the lid on the conflict of interests and consider how to protect the client\u2019s best interests!
\nThe legislative reform following the Storm collapse totally ignores direct property assets. But, just like Bartholomew\u2019s ever-expanding collection of hats, I believe this issue reaches far beyond the single problem of traditional marketeers and into the realm of property investors\u2019 own trusted advisors.
\nUntil we see legislative change, I have this advice for consumers:<\/p>\n

    \n
  1. Be wary of anyone promoting brand new property. A property developer can include any number of middle-men and load all their kick-backs into the purchase price of a new build, but it\u2019s physically impossible for this to happen when an investor is buying an established property from a private individual.<\/li>\n
  2. Remember that qualifications as an accountant (tax), mortgage broker (loans), and financial planner (managed funds) should not be confused with qualifications as an accredited property investment advisor.<\/li>\n
  3. Ask to see proof of your advisor\u2019s qualifications as an accredited property investment advisor with the industry association, PIPA.<\/li>\n
  4. Ask them how they make their money. Even if they disclose the rebates they receive, ask yourself why the property they\u2019re pushing (conveniently) happens to be the right one for you when there are 9.3 million properties to buy in Australia.<\/li>\n<\/ol>\n

     
    \n    Propertyology works exclusively with property investors<\/em><\/strong><\/a> to purchase properties in strategically chosen locations all over Australia. Simon Pressley is Managing Director of Propertyology, a REIA Hall Of Fame Inductee, property market analyst, accredited property investment adviser, and Buyer\u2019s Agent. <\/em><\/strong>
    \n <\/p>\n","protected":false},"excerpt":{"rendered":"

    In the old Dr Seuss story, The 500 Hats of Bartholomew Cubbins, Bartholomew\u2019s one hat turns into a troublesome string of 500, raising the ire of the king and getting poor unsuspecting Bartholomew into all sorts of strife. Unsuspecting property investors can find themselves in…<\/p>\n","protected":false},"author":176692471,"featured_media":20033,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[13,20,25],"tags":[70],"class_list":["post-20031","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-latest-story","category-propertyology","category-sponsored-channels","tag-featured"],"yoast_head":"\nBeware The Two-Hatted Advisor - Realty Talk<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/channels.realty.com.au\/realtytalk\/beware-the-two-hatted-advisor\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Beware The Two-Hatted Advisor - Realty Talk\" \/>\n<meta property=\"og:description\" content=\"In the old Dr Seuss story, The 500 Hats of Bartholomew Cubbins, Bartholomew\u2019s one hat turns into a troublesome string of 500, raising the ire of the king and getting poor unsuspecting Bartholomew into all sorts of strife. 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