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How to tell the good from the bad? Your guide to navigating the market of financial advice

Saturday, November 30, 2013

It has often been said that all advice is not created equal.  An advice that has worked well for me may not be for you at all.  For as long as Auckland property market remains buoyant, our mainstream media will always be awash with property mentors and investment advisers.  How do you navigate yourself through all the commercials, adverts, testimonials promising the Midas touch?  If you are already being advised, how do you know that good performance of your portfolio is down to the quality of the advice received and not just propelled by the natural market force?   

Here are some tips to consider:

  1. Find the right adviser.  Finding a property adviser is not difficult but finding a good property adviser may be trickier.  Ask around at APIA events to get solid testimonials from investors who are in the same situation as you.  Be mindful that sometimes the most knowledgeable investors are not mentors because they are quietly doing what they are good at doing, which is investing.  
  2. Know the differences between an adviser and a salesperson.  Are you taking advice from a qualified financial adviser or a salesperson?  Always find out how the adviser is being remunerated.  Are you paying for the advice or are you paying for an investment product?  Does he or she have a conflict of interest when giving you advice?  This is not to say that a salesperson of an investment product is incapable of giving good advice but be aware that their opinions may not be as unbiased as you would have liked. 
  3. Are they qualified to give advice?  While most property mentoring services do not come under the ambit of the Financial Advisers Act, it is prudent to look into the background of the person whom you have come to rely upon for investment advice.  What are their formal qualifications?  Are there any independent testimonials that speak to their strengths as advisers?  How long have they been investing in property and how well are their portfolios doing?  
  4. Are they taking their own advice?  Does your advisor put his money where his mouth is or are you being sent out there into the market on your own?  At his keynote presentation, Lewis Donaldson, reminded us that many real estate agents selling investment properties do not invest in properties themselves.  In fact, many know very little about the differences between a good home and a good investment property.  
  5. Consider the source of published surveys and statistics.  Investors value certainty above all else.  But investment by virtue is an art of predicting the future and hedging your bet, which is probably why most investors keep a close eye on published studies, surveys, and statistics.  While hard numbers can help you understand the present and foretell the future, it is important to understand the motivations behind their publication.  For example, a real estate agency that is eager to attract more investors to buy its excessive housing stock is more likely to point to figures that support the suggestion that it is a good time to be buying investment properties.  
  6. What is the nature of your relationship with your adviser?  Listen carefully to the language of your adviser.  Does she talk about about the future at all?  Does she ask you questions about your short- and long-term goals?  Is she more focused on one single deal or does she talk about investment in a more generic term?  Advisers who are fixated on one single deal may be good for just that one deal but they may not have the resources, expertise, or even interest, in advising you in the long term.  

The danger of bad advice only manifests itself when the market collapses which is when many of us will be well past the point of no return.  Or as Warren Buffett so eloquently put it, 'Only when the tide goes out do you discover who has been swimming naked.' Take advantage of the strong market force right now and empower yourself with the right advisers who will properly support your investment endeavours.  

What are some of the strategies you use when you evaluate a property adviser?  Share your thoughts below. 


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Mathieu Holt- Managing Director, The Tenancy Practice Service & TPS Credit Control
Through the Association I found the channels and methods to fund the purchase of property I never dreamed about. Grant Brown

All round it has been one of those things Neil and I felt was really worthwhile belonging to. We have learned so much it has just built our confidence in what we are doing.

Janice Bieleski
I read two articles in the monthly magazine that saved me over $5,000. That is my membership fee for the next 26 years and I am sure I will learn a whole lot more! John Duncan
Fantastic organisation. The networking opportunities are brilliant and provide us with information and opportunities that cannot be obtained anywhere else. We learn something new at every meeting and we've been in this game for nearly 20 years. Pauline and Gyanen Kumar

I find the information obtained from various APIA meetings very useful in guiding my own property investment and rental management.  I also enjoy the networking opportunities with like-minded investors.  I am inspired by other investors’ success and find the more experiences and knowledge that I share with others, the more confident I become.  

Thanks to all APIA event organizers and administrators for your brilliant work. 

Stella Shao

I like talking to people and learning from their experience because it gives me the confidence to invest well. I think it is a knowledge thing. I now know I am doing things the right way.

Stephen Weatherall

My APIA membership has become a total success.

Every time I attend a monthly or regional meeting I come away with so many useful and positive tips that have added value to my property investments and management.

Not only that, the website is a great place for practical advice and useful information. It has now evolved into an important resource for my business.

Talk about value for money! The discounts I have been getting at Bunnings when I present my APIA membership card have more than paid for my annual subscription!

Tim Duffett, Plan A Investments Limited