Financial planners and developers join forces to entice SMSF investment
Property developers are offering greater incentives to financial planners who refer self-managed super fund clients to their projects as the appetite for real estate among the $430 billion DIY super fund sector continues to grow.
The closer ties and increased financial incentives come on the back of recent changes to self-managed super fund rules and the growing investment appeal of property over shares, which have spurred more financial planners to add property advice to their service proposition.
According to ATO figures, during the past year the amount of money SMSFs are allocating to property has jumped 25%.
In May this year property developer Stockland signed an agreement with financial planning group Professional Investment Services whereby it would pay its planners 3% for referring leads that result in a sale.
According to the Australian Financial Review, developers have now upped the ante by reportedly offering commissions of up to 7% for successful referrals.
From July next year financial planners will be banned from receiving commissions from fund managers and other investment providers, but this ban does not extend to receive commissions from real estate developers.
Financial planning group Money Tree provides property advice as well as mortgage lending and investment property sourcing to its client. It promises “exclusive access to some of best investment properties in Australia”.
Besides the volatile share market encouraging a reweighting towards real estate, property has become more attractive following the release of draft ATO rules that allow DIY funds to renovate and improve their properties (provided they don’t have to borrow within the fund to do so) as well as greater clarity about the type of real estate assets that a fund can acquire.
Ray White and Raine & Horne are among the real estate franchises who have already set up referral arrangement with financial planners while McGrath Real Estate is also believed to be considering a partnership with advisers.
However, the move by developers to circumvent real estate agents has drawn concern from industry bodies, with the Real Estate Institute of Australia defending the role of its members in the buying and selling of property and providing property advice.
