My financial planner said...

[want2bewealthy]

I had an appointement this morning with a new financial planner who sounded very good and has come recommended to me, I had to take off from work for 15 mins and saw him, 20 mins early out the front in a brand new, 70k car.

I thought, hmmm, I dunno about this guy, if he's an investor, he shouldnt be buying an expensive, highly depreciating asset like that.. I though to myself.. maybe he's rich!

I phoned him back when I returned because he had already left.. I was on time, he was early..
I asked him, "are you an investor?"
he replied "yes, avidly"
I said, "property?"
he said "yes, I own my own home"....
He also mentioned that If I planned with him, it was possible that I could even semi retire at about age 50!!, I felt like saying, I feel like retiring much earlier than that..
But instead, I just said, see ya later!

 

[steveadl]

Doesn't surprise me a hell of a lot. A lot of financial planners have no idea about property. Was reading the CBA poster in the branch the other day saying along the lines of: Come and see our financial planner for advice on Shares, Managed Funds, Superannuation, retirement planning etc. etc.

I think it's a bit of a shame that people who believe they are doing the right thing by going to see a financial planner because they don't feel confident themselves, may be missing out on possibly a huge investment area just because financial planners can't make any comission by advising property (so aren't educated on the subject either).

I'm not saying property is for everyone, but it would be nice for them to at least be made aware of the option.

 

[LynnH]

want2bwealthy

An 'avid property investor' - who only owns his own home??? Mmmmm - would be enough to put me off using him, too!!!

Cheers
LynnH

 

[Ausprop]

there is a public perception that FPs are somehow more independent than say a real estate sales person. In a previous business we had wealth creation and mentoring programs that involved a combination of personal budgeting and property as the investment. it was a bit of a flop as most people would say 'ok all sounds good, but let me run it past my financial planner first'... so they would go see one and of course there is no reason for an FP to endorse someone elses sales, so they would say dont be crazy buying property... let me she you this lovely managed fund. All too hard... gave up in the end.

 

[Mr. Fabulous]

But instead, I just said, see ya later!

Probably one of the best investment decisions you'll ever make.

Mark

 

[Mr. Fabulous]

just because financial planners can't make any commission by advising property

Not true. It is possible, but hey - I'm glad 97% or so of financial planners don't recommend it, it makes for a ready made niche market, which suits the 3% of us in the industry that do very nicely.

Mark

 

[steveadl]

Not true. It is possible, but hey - I'm glad 97% or so of financial planners don't recommend it, it makes for a ready made niche market, which suits the 3% of us in the industry that do very nicely.

Mark

Really? Can you explain how you do it Mark ie.what option you give them? I thought the closest they could advise is a LPT? Or are you talking about a fee for service model as opposed to a trailing comission?

 

[lizzie]

i recall going to see a financial planner in around 2001 who had a great office, full of people, very exurberant and enthusiastic about borrowing to hilt to invest in the share market - and telling us about his clients (no names) and how much they trust/invested with him. for a naive investor his ideas and claims seemed very exciting.

fortunately we never got around to doing anything with him - the sharemarket took a plunge soon after, his office was closed up and i wonder how many "investors" he took down with him - having borrowed to the hilt.

 

[Mr. Fabulous]

No, I'm talking about direct property. Actual resi I.P.'s. This is how we do it (can't speak for other planners):

- client wants to purchase property
- client sees agent, agent sells client property
- agent gives part of commission to planner

It's all perfectly legal and fully disclosed to the client.

Mark

 

[coopranos]

I had an appointement this morning with a new financial planner who sounded very good and has come recommended to me, I had to take off from work for 15 mins and saw him, 20 mins early out the front in a brand new, 70k car.

I thought, hmmm, I dunno about this guy, if he's an investor, he shouldnt be buying an expensive, highly depreciating asset like that.. I though to myself.. maybe he's rich!

This is a comletely ridiculous line of thought - you are pushing your own values onto someone else without any understanding of their situation. Would you see a planner that drove around in a beat-up old VW?? The majority of people wouldnt. I bet he was wearing a suit as well, are you upset because he should have invested that money he used to buy a suit and should go shopping for stubby shorts and singlets at the op shop!
What if he is earning $200k a year, loves working, and just pumps money into his super every year, and is happy to do that till he is 50-60. Is that any less valid than what you want to do? If he works hard, isnt it up to him to decide what he wants to spend his money on? For all you know his "own home" might be a $3m mansion with ocean views, would that make him more respectable to you? Perhaps he has a few million in the sharemarket, and paid cash for his car out of this months dividends, would that be more acceptable to you?
I have no disagreement with the idea that you want to find a planner that invests the way you want to invest, and you should definitely do that, but if he is living his life the way he wants to and is not a burden on the community it seems a touch judgmental for you to be criticising him for which car he chooses to own.

 

[lizzie]

i think the point of the comment on the car is that you can own a very nice car for $35-40k (commodore, falcon etc) which is half the price.

i just think w2bw was wholey unimpressed by this "investment guru" - however, his advice might be very good for those uneducated masses. be proud w2bw that you have moved far ahead and above this basic level of investing.

 

[Highlygeared]

i thankfully know enough about property and share analysis to make good decisions (most of the time), but im always open to new info - never know what u may pickup. Still i wouldnt invest my time spending time with financial planners - agree most push commission based products and probably know less than i do when it comes to cold hard investing, and the mistakes.

my money works very very hard for me, a lot harder than i do , however if u know anyone who could advise me how to increase my ACTIVE cashflow - so i can leverage into even more properties...???

 

[Ausprop]

No, I'm talking about direct property. Actual resi I.P.'s. This is how we do it (can't speak for other planners):

- client wants to purchase property
- client sees agent, agent sells client property
- agent gives part of commission to planner

It's all perfectly legal and fully disclosed to the client.

Mark

we use to pay planners 5% coms however that was for OTP and with building delays we found the planners were getting really upset about how long it took them to get paid. especially when after 2 years the developer wanted to cancel contracts! boy that was fun. Mark if you send a client off to an agent how do you control the client sufficiently to ensure they don't just wander off and buy a property from an agent that doesn't have an aligned fee structure with you?

 

[alexlee]

I thought, hmmm, I dunno about this guy, if he's an investor, he shouldnt be buying an expensive, highly depreciating asset like that.. I though to myself.. maybe he's rich!

I phoned him back when I returned because he had already left.. I was on time, he was early..
I asked him, "are you an investor?"
he replied "yes, avidly"
I said, "property?"
he said "yes, I own my own home"....
He also mentioned that If I planned with him, it was possible that I could even semi retire at about age 50!!, I felt like saying, I feel like retiring much earlier than that..
But instead, I just said, see ya later!

Coopranos makes a very good point. Would people trust a financial planner driving a bomb and dressed in $5 trackies? It may not make financial sense but people do look at a person’s image. That car might be a company car, for example. We happen to know that appearances can be deceiving but most people don’t.

You didn’t mention whether you told him your situation before his comment about how you can semi-retire at 50. If you hadn’t, he was probably making some simple judgements about you based on your age and income. I know no-one expects me to have the balance sheet that I have based on my age and income. I get plenty of condescending comments about how I should save my money and put it into super.

As for him saying he owns his own home, that just means he’s not a property investor. You don’t have to be in property to get rich. I personally think property is a great asset class, but I also know people can get rich just with shares.

Just recognise that FPs probably can’t help you with property, but that doesn’t mean they can’t help you with, say, funds, shares, insurance, etc. And a good investment portfolio really should have multiple asset classes. He may know the next Berkshire Hathaway!
Alex

 

[Mr. Fabulous]

i think the point of the comment on the car is that you can own a very nice car for $35-40k (commodore, falcon etc) which is half the price.

Hi lizzie,

I don't think the actual value of the car is important - I think the point coopranos was trying to get across is that w2bw has a certain picture of how wealthy people 'should' act. That is, wealthy people don't buy expensive cars, because they are depreciating assets. Therefore if someone owns a relatively expensive car, they can't possibly be wealthy.

It's the old 'don't judge a book by it's cover' syndrome. I personally know people who are quite wealthy who dress very well, drive very expensive cars, have a lot of toys, etc and I also conversely know wealthy people who kick around in trackies and old jeans and drive sh.tboxes.

Mark

 

[Mr. Fabulous]

we use to pay planners 5% coms however that was for OTP and with building delays we found the planners were getting really upset about how long it took them to get paid. especially when after 2 years the developer wanted to cancel contracts! boy that was fun.

Hahaha, I can imagine. You put in all that work - and for what?

Mark if you send a client off to an agent how do you control the client sufficiently to ensure they don't just wander off and buy a property from an agent that doesn't have an aligned fee structure with you?

We don't - it's up to the planner to make sure the client stays onboard and buys something. Most of the time the clients move quickly because they know our criteria and they know the properties are good quality properties, so they tend to snap them up quickly.

Mark

 

[anrke]

Steady on people

I've seen quoted "Avid property investor" and "investment guru" both seemed to be used in sarcastic terms and without foundation, about a Financial Planner that WTBW refused to see people he drove a nice car and only told him he owned his own home.

I agree to find an advisor who is knowledged in the areas you want to invest, but you'll be doing yourself a great disfavour if you'll only seek advsiors on a hunt to simply hear what you want to hear. Perhaps a refereal to the Keithj interview is worthwhile here - it ain't all about the property.

 

[MichaelW]

Mark if you send a client off to an agent how do you control the client sufficiently to ensure they don't just wander off and buy a property from an agent that doesn't have an aligned fee structure with you?

Precisely.

I won't speak for Mark, but I do know which company he works for and what you've described is a definate risk. I can attest to that as I am a client of that company and did exactly as you've described.

I went on a bit of a shopping trip with their property agent but all he showed me was new build Mirvac kind of stuff with nice big sales commissions paid by the developer. I'm not sure how much the agent pocketed and how much the financial planning company pocketed, but it didn't matter as I didn't buy anything he showed me. I actually said: "I don't want something new, I want something where I can value add, either a development site or a nice reno in a good location". He said: "Not my gig, there's no money in it for me".

I said thanks heaps and went and sourced a nice little development site on my own. I think the model works if you're getting new investors into passive buy-and-holds, but for those that want "fries with that" then it doesn't really stack up.

So I guess, at the end of the day, it proved to me that the role the FP plays is more in setting the big picture stuff and assisting with discussion around cash flow, leverage and growth versus income assets. Actually sourcing those assets to maximise my returns I do alone now. Admitedly, I am still in the managed fund they suggested and which they got a nice little commission from my entering. You gotta share some of the love right!

Cheers,
Michael.

 

[steveadl]

Just recognise that FPs probably can’t help you with property, but that doesn’t mean they can’t help you with, say, funds, shares, insurance, etc. And a good investment portfolio really should have multiple asset classes. He may know the next Berkshire Hathaway!
Alex

Very true, my financial planner just talked me into some income protection insurance which until now I had shunned. I definitely think there is a place for them - just not when it comes to property investing (for most of them, Mark is an exception I haven't heard of before )

It's the old 'don't judge a book by it's cover' syndrome. I personally know people who are quite wealthy who dress very well, drive very expensive cars, have a lot of toys, etc and I also conversely know wealthy people who kick around in trackies and old jeans and drive sh.tboxes.

Mark

Depends on how rich they are too If they have net assets of say $2M, they won't be buying too many cars, or you could drive past the house I saw the other day (one of my employees husbands boss) of one guy who was opening the boot of his Mercedes to get something out..... next to that in the garage was the Ferrari, the Lambhorgini, his daughters Audi and 5 other cars (he's a developer)! When you have that much money, a few toys here and there are'nt going to effect you much.

 

[Ausprop]

"When you have that much money, a few toys here and there are'nt going to effect you much"

absolutely - I dont get this fixation that if you dont drive a 76 corolla then you are a reckless live for the moment no hoper. When your net wealth hits the right level, then a new merc or porsche or whatever is small change in the scheme of things and not much different to buying a new microwave