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A survey of Australian property investors has revealed significant opportunity for retail financial advisers to become specialised in direct property advice.

Having surveyed more than 800 property investors,ifa sister title Smart Property Investment and industry body Property Investment Professionals of Australia (PIPA) found that more than 30 per cent of active investors are seeking professional guidance.

In addition, 59.7 per cent of respondents indicated they are taking a “long-term, strategic approach to property investment” signalling what PIPA chair Ben Kingsley describes as an “ideal service addition for financial planners”.

“Australians are finally starting to appreciate that successful property investment doesn’t come easy and they are looking for professional guidance to make more well-informed decisions,” Mr Kingsley said.

“Property investment advice is an underserviced market that compliments a range of services, including mortgage broking, accounting, financial planning and buyer’s advocacy.”

But Mr Kingsley added that being an experienced financial adviser does not necessarily equate with the qualifications to provide direct property advice, urging advisers to become accredited through PIPA’s own Qualified Property Investment Adviser (QPIA) program.

The extent to which direct property advice should be embraced by retail financial planners has been a bone of contention in the financial advice community for some time, with some stakeholders concerned about the legal and licensing ramifications.

FPA general manager, policy and standards, Dante De Gori told ifa that in order to fully cater to the advice needs of property investors, an adviser may need a real estate practitioner’s licence.

“[Advisers] can definitely talk about asset classes – including property – in respect to the appropriateness of the asset allocation for a client but they can’t make specific recommendations on direct property,” Mr De Gori said.

However, financial services lawyer Peter Bobbin of Rockwell Olivier told ifa that as long as an adviser is not making misrepresentations to the market and holding themselves out as a buyer’s agent, then there is nothing precluding them from providing “advice on property and on specific property”.

Baker & McKenzie partner Astrid Raetze concurred that “there is nothing in their AFSL that prevents” direct property advice, but added that an adviser may want to “increase their PI insurance if they give this advice”.

24 April 2014
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