What makes a good financial advisor for property investment?

According to Max: “When you're looking at a traditional portfolio for a client with superannuation or just a pure managed fund investment, you have to look at different types of funds and how they blend well together."

“You might have a fund that ... focuses on the big stocks and you might have a fund that focuses on the smaller stocks that has a different profile—[and] you blend [those] together.

“That's sort of the way that I've done my property portfolio investing up to now,” he explained further.

While it’s important to find properties that are high-growth, a property investor must also make sure that he has the capability to hold the asset for a long period of time, considering all the fees and processes that it entails.

After all, most property investors would agree that success in property investment is more about time in the market than timing the market.

Finding a good financial advisor

Wealth advisors and financial planners often prefer to deal with shares, managed funds, and other asset class, so finding a property-savvy financial planner could be a challenge for those who choose to create wealth through property.

According to Max, aside from the fact that it’s harder to give advice on property, financial planners traditionally make bigger commissions on other investment products. Most financial planners are also trained better in handling liquid assets such as shares and bonds.

He said: “Property's obviously not that kind of investment. You can't sell a bathroom or a bedroom if you need cash out of your portfolio, whereas, it's easy to pass a lot of shares.”

Finding a good financial advisor for property investment takes some serious relationship building. The right advisor for you is someone you can trust with regular discussions and assessment of both your financial and personal goals, as well as your capabilities and limitations as a property investor and how you can work with that to achieve success.

Max advised property investors: “Ask the question, ‘Do you invest in property? Are you a property investor … ?’ If all they're talking about is shares … then that's not the planner for you.”

“I would [also] always ask, ‘How [do] you get paid … ?’ [Do you pay them] a fee that they charge you or ... [do they get paid] from the commission from the [financial seller of the property],” he added.

Essentially, their job is to look at your personal wealth situation without any prejudice of product preference and offer you the best financial advice so you could determine the solutions that meet your specific needs.

“Based on your appetite for risk, no doubt, based on your assets that you currently have, based on your capacity to earn, based on your age … [and] on all that sort of stuff,” Phil said.

It is important to remember that every property investment journey is different, so you need to find an advisor who is willing to understand the ins and outs of your journey instead of someone who simply follows a pattern. Finally, discuss with them your endgame and strive to create plans for the long-term.

According to Max: “What do you want to achieve from that portfolio? What's the plan [going to be] from that portfolio? What's it going to do for you in the future?"

“Retirement is for me—having the choice to … [not] work anymore or … work two days a week … [or] take six months off a year. It's [all about] having those options available to you.

“If you don't plan, you're not going to get there … Whether it's shares, or your super, or property, you must have a plan in place for that long-term,” he concluded.

Tune in to Max Pagnin’s episode on The Smart Property Investment Show to know more about the benefits financial planning can have on your portfolio as well as several facts about Max’s own portfolio and how his background has shaped how he views the property market.

Tags:

• Expert advice

Share