10 questions to ask your property investment adviser

Advice around property is a minefield; despite the issues inherent in seeking out help no one should feel that they can’t find decent information and assistance if they need it.

These days anyone from accountants, financial planners, buyer’s agents, property mentors and even some developers can have a property advice wing that looks to help investors strategise.

Here are 10 questions to get you started with choosing a property investment adviser.

1. Are you being paid by anyone else?
   
   The most crucial guidance you’ll ever receive is to follow the money.
   
   It’s worth asking your property investment adviser upfront whether they’re receiving kickbacks, commissions or any other form of payment from other businesses. This doesn’t mean you shouldn’t necessarily use them, although some will say that it means they have other peoples’ interests ahead of yours, but at least you can be wary of any competing influences.
   
   Remember, if you’re not going to pay for the advice or information then they must be getting an income somehow. This ties in with another crucial question: Do you sell property?
   
   
2. Can you explain your fee structure, and the justification for the costs?
   
   Whether you’re looking for once-off advice, or someone you can call regularly for a mentor-mentee type relationship, you must know how much they’re set to charge.
   
   Advisers offering higher levels of access and closer assistance on all parts of the property process will understandably charge more, but you want to know how they compare to other advisers and how they justify that fee. If they’re much higher than other people you’d be wanting to know what extra level of expertise they provide to justify the cost, similarly if they’re much cheaper you’ll want to know why. This will quickly tell you what you can and cannot afford, as well as whether or not it’s worth the outlay.
   
   
3. Do you have any affiliations?
   
   From memberships to peak industry bodies, or even professional groups that give them a better standing, to companies they regularly do work with – it’s time to ask about their connections.
   
   Some of these may be to your benefit later, for instance they may have a particular accountant that you can potentially use or they may be able to recommend a building and pest inspector. However, other affiliations may be a little dubious – it’s good to know who they keep company with.
   
   
4. Are you licensed and qualified to give advice?
   
   If the adviser is providing financial advice, which can come in many forms, then they need to be licensed to do so. Make sure you double check their licence details. “General advice” that doesn’t take into account your specific situation is often acceptable without a license, and property has been a grey area.
   
   However, if you’re engaging a professional adviser to create you a financial plan and strategy then you want to ensure they can legally provide specific advice. ASIC has some interesting information on the distinction in real estate here.
   
   Real estate agents, and those involved in the transactions, should be licensed agents (and should be so in each of the states and territories they deal with).
   
   You also want to know whether or not they’re qualified. There are a number of financial qualifications, and you may be keen to know that they have a degree in financial planning or accounting, for instance. However, real estate credentials are also worth a quick look – for instance, the Property Investment Professionals of Australia’s Qualified Property Investment Adviser training.
   
   
5. What is the extent of my support from you?
   
   Are they there to advise on the type of property to buy, or the potential strategy you will have? Make sure you both have your expectations of their service offering explained upfront. If you want to walk always with an investment plan that leaves you to find your own properties, or engage a separate buyer’s agent to do so, then ensure that you both know what the expectations are.  
   
   You also want to know whether in-person meetings, phone calls or emails are the norm for your interactions.
   
   
6. What type of property (and other products) do you/do you not cover? Do you have a speciality?
   
   Some property investment advisers primarily cover new apartments or units, while others specialise in a very specific type of stock. This could be sub-$400,000 regional properties, or $800,000+ inner city blue chip stock.
   
   Ensure that their philosophy and range aligns with where you are in your property investing, your own thoughts on it and that you can afford the property they will be suggesting.
   
   You also want to ask them their thoughts on these types of properties and their justification around suggesting them. Not every property investor is the same, so it makes sense that not every investor will be suited to the same type of property.
   
   It’s also worth knowing if they also advise on other investments, such as shares, that can assist you with diversifying your portfolio.
   
   
7. What does your own portfolio look like?
   
   While it isn’t crucial that your adviser owns property, or is even successful in this aspect of their lives – not everyone is lucky enough to avoid death, divorce and other personal situations – you do want to know if they practice what they preach. However, you not only want to know what their portfolio is like, and the reasoning behind it, but what the average portfolio of one of their client’s looks like.
   
   If their average client is a young professional couple on $150,000 and $90,000 per annum, and you are a single parent 45 year old on $80,000, then it may be time to question whether this person is the right adviser for you.
   
   
8. Do you have professional indemnity insurance?
   
   This type of insurance, which is particularly crucial for buyer’s agents, covers a number of different situations from fraud or if something goes wrong.
   
   It is often recommended that up to $2 million be held in professional indemnity insurance. Without this, you may not have an avenue for recourse and are leaving yourself open to problems. This can vary between states and territories, so you should double check.
   
   
9. What is your complaints procedure?
   
   If something goes wrong, what do you do? It may sound as though you’re whingeing ahead of time, however you need to prepare yourself for if you are not happy with the service you’re provided.
   
   Is there a mediation board that the company offers, are there any guarantees (and how solid really are these?), and how do they treat complaints and queries? Turnaround time may also be crucial for you to ask when discussing the procedure.
   
   
10. Which areas of your service offering are you most proud of, and where do you want to improve?
    
    It sounds a bit like you’re interviewing your prospective adviser, but allow them to give you their strengths and weaknesses on their own accord. This will let you know how in touch they are with the business and their offering, and their focus as a company.
    
    It should also open up a further discussion into the processes and history of the company or their background as an adviser.

What would you ask a prospective property adviser?

YOU MIGHT ALSO WANT TO READ

How to spot a dodgy operator

Select your buyer's agent wisely: What you need to consider