Property Financial Plans
- Thread starter Terry_w
- Start date
This analogy doesn't really work because I won't be selling properties (TVs), only planning optimal ways to buy more than a few.
Thanks Vixs, good to hear from a financial advistor. Good points.
I am thinking about this because I see a need for it and have had requests - which I haven't been able to act on. It is also an area of interest for me. I don't expect to be doing that many, perhaps 1 or 2 per month at most.
The major issue I have with free consults it that it ultimately forces the adviser to push people into products, structures, etc that arent necessarily suitable for them.
Lets take house of wealth as an example. If we offered a free one hour consultation and 20 people a week took up such an offer you are left with very little time to service your existing clients. In fact your business will over time suffer as you arent making any money. Quality declines abd people leave as you are then in the position of either starting to charge for consultation or start selling them structures they may not even need.
Thats why I have never been convinced a decent practitioner who is busy has time to offer free consults. Those not busy or building a fresh base do sometimes.
Lets take house of wealth as an example. If we offered a free one hour consultation and 20 people a week took up such an offer you are left with very little time to service your existing clients. In fact your business will over time suffer as you arent making any money. Quality declines abd people leave as you are then in the position of either starting to charge for consultation or start selling them structures they may not even need.
Thats why I have never been convinced a decent practitioner who is busy has time to offer free consults. Those not busy or building a fresh base do sometimes.
A model....
Lets say I overstate income by 2% and understate costs by 2% then assume growth 1% higher than expected. The projections are meaningless. The longer they run the more meaningless they are.
Thats what property sellers do !! These models are always over-optimistic and never seem to factor in real life issues like a tenant vacancy, a change in interest rates (economists cant predict them !!), a baby is born, a strata "problem", change in bank lending policies, wife walks out, ALP ditches CGT discount for non-residents etc etc.
Lets say I overstate income by 2% and understate costs by 2% then assume growth 1% higher than expected. The projections are meaningless. The longer they run the more meaningless they are.
Thats what property sellers do !! These models are always over-optimistic and never seem to factor in real life issues like a tenant vacancy, a change in interest rates (economists cant predict them !!), a baby is born, a strata "problem", change in bank lending policies, wife walks out, ALP ditches CGT discount for non-residents etc etc.
Not always. I'm thinking one accounting / wealth / property firm that really does though. I filter who gets free consult time - No small tax clients. Its more about determining how I can assist, costs and if clients fits. I find it encourages more than not offering it.
What is a hour worth ?? A recent new client I gave a hour to review his position. Saved $60K tax and did a fair amnt of work. After 1 hr I could tell him what I would save and what my plans were. I didnt bill that hour but billed the final job. The first hours rate was aweful but every other hour was great.
Models have a place and if used for long periods of time, generally the final specific number is not the useful part of the model. Agree that what some property sellers do as part of their spruiking is not very useful. Overall, my opinion is that the customer needs to be educated on the limitations of the model and what insights can be gained from the model, rather than what spruikers do.
This is something which you may be able to add value on Terry. Instead of just a simple, you earn $x, save $y, you can buy property in Year 3, property doubles in the magic 7 years, so then buy property 2, retire in 10 years with 10 properties etc etc. It may be more, here's a scenario for the next 5 and 10 years. These are the assumptions. If things go well, or if you can save an additional 5% of your income this is the upside. If economy tanks, you take 2 years out for wedding & kids this is the downside. This maps out the likely possibilities and frames the future.
I have never had a financial plan done so don't know what happens. But if all I got was a printout of tables based on some simple assumptions of income, expenses and property growth rates, I don't think that is much value add.
Considering likely all large companies use models as part of their planning, forecasting and to meet other business operation requirements, I'm quite sure they would be of some use in an individual's case too.
I don't like projections for all the reasons stated above, but they do serve a purpose in illustrating the concepts at work. No equity chart of property value chart goes diagonally up and right at the same rate year on year. The premise is that if you stick to the strategy over time you should be headed in the right direction.
If the projections prove meaningless because they were too ambitious, at least you review your situation with your planner on an annual or biennial basis to make sure you're not drifting too far off course.
If the projections prove meaningless because they were too ambitious, at least you review your situation with your planner on an annual or biennial basis to make sure you're not drifting too far off course.
Im going to go out on a limb here and suggest the Financial Planning industry is a big con put out there by the financial banking sector.
Its just another product they can suck more dollars out of you with by preying on your fear of not having enough finances to fund you in your retirement years.
Lets face it, these so called financial planners are having to work themselves to keep the wolf from their own doors, so how can they advise with conviction the path to wealth.
Its just another product they can suck more dollars out of you with by preying on your fear of not having enough finances to fund you in your retirement years.
Lets face it, these so called financial planners are having to work themselves to keep the wolf from their own doors, so how can they advise with conviction the path to wealth.
I think Empower Wealth in Melbourne does something similar , however they include potential income from Superannuation to help achieve the final outcome.
I for one would be interested as long as the fees are not too high...
I for one would be interested as long as the fees are not too high...
Not everyone is a good candidate for advice.
If you can do what an adviser does, have the time, resources, education and experience to do so, by all means you should do it yourself and save yourself the fees. That would be an excellent outcome.
If on the other hand you lack any of the above, and nearly all lack the education, most lack the experience, many lack the resources and the majority don't have time - then you may find you could have a rewarding professional relationship with a good financial adviser.
Forums such as this are a hangout for those that have experience and educate themselves, so while you may see no benefit in having an adviser I assure you that everyone I spoke to this week is grateful they do.
The other side of that coin is that like all industries and professions, some people really do just suck at their job, and those advisers are out there.
I agree totally...there is a market out there that dont have the attributes you've listed above, who want their hands held all the way and are prepared to pay a premium for it.
It's this market the FP industry is catering to. Problem is most the market is unconsciously incompetent with the majority accepting whats put before them with blind faith in the planner - good and/or bad.. They dont realise or question why the planner is still planning.
I would definitely be interested
I think there is a need for a service like this.
Over the years I have been to many financial advisors with no luck.
Even when I've said I need someone that understands property portfolios.
Now I'm trying to decide what the bst options are for me as I get very close to retirement.
Want to practice on me Terry?
Over the years I have been to many financial advisors with no luck.
Even when I've said I need someone that understands property portfolios.
Now I'm trying to decide what the bst options are for me as I get very close to retirement.
Want to practice on me Terry?
The senior partner in my firm is in his mid-30s and has net worth in the high single digit millions as a man who came from nothing. If he wasn't doing this, he'd be out of his mind with boredom. There's only so much golf one can play, and 6 weeks a year is plenty of holiday time.
For those that are financially successful in their own right, being a financial adviser is enormously rewarding in terms of the relationships you build and the success you get to take part in. Insurance is also an area that is very rewarding to those that are empathetic and caring - you're the only one bringing a cheque when people are at their lowest and everyone else is bringing bills.
You are right, in the way there is that old saying "Those that cannot do, teach." but it's a job I really enjoy, and for those further down their career path I've seen that they find it rewarding as well.
But Wesuck made us pay for one so we qualified for our first SMSF loan , then the bank didn't agree with how much they said we could borrow ...
Grrrr
Cliff
