Record low interest rates are stoking Australia’s property market, with some expressing concern that property spruikers are targeting self managed superannuation funds investing in the sector.
Providing property investment advice can be a very lucrative business. Anecdotally, a property investment adviser can earn anywhere between $20,000 to $40,000 commission on one property deal, selling a $500,000 new apartment or house-and-land package. Considering the money you can make, some of you reading this might now be thinking that working as a property investment adviser is a smart career move. But before you do, answer the following questions.
To become a property investment adviser, what educational qualifications are required?
Diploma in Financial Services Diploma in Real Estate Bachelor of Business
Answer: none of the above.
That’s right, you can advise someone on buying a million dollar property and make tens of thousands of dollars in commission in this one transaction, yet you are not obligated to have any educational qualifications; not even completed Year 12.
The compulsory continuing professional development requirements for a property investment adviser are:
Attendance at the national conference (15 hours) Equivalent of 20 hours which can include attendance at seminars, conferences, guest speaking Equivalent of 30 hours which must include attendance at the national conference.
Answer: none of the above.
It makes sense, doesn’t it? Why would you have to do any ongoing training or development to keep up your skills if there was no minimum training or education requirements when you first started in the job?
The licensing requirements to become a property investment adviser include:
Police check Minimum entry educational qualifications Endorsement from two current property investment advisers All of the above
Answer: none of the above.
A life insurance salesperson needs to be licensed. A real estate agent needs to be licensed. You would think that someone who is advising you on making one of the biggest decisions in your life is also licensed. Well, you thought wrong.
The regulatory body that oversees the property investment advice industry is:
Real Estate Institute of Australia The Financial Advisers Commission Australian Securities and Investments Commission (ASIC) A and C
Answer: none of the above.
You would hope that a large and powerful organisation such as Australian Securities and Investment Commission (ASIC) would be keeping an eye on investment advisers who are involved in some of the most important and expensive life decisions people will make. Unfortunately this is not the case. “Why?” I hear you ask.
The simple answer is real property is not considered a “financial product” under the Corporations Act. Anyone can give advice on real property and is not obligated to abide by the Corporations Act nor do they come under the scrutiny of ASIC.
This is despite well-known cases such as the collapse of the high-profile property spruiker Henry Kaye’s empire, which was prosecuted by ASIC in 2003 for providing false and misleading investment advice to property investors. In 2010, Kaye was disqualified by ASIC from managing corporations for five years.
The Property Investment Professionals of Australia (PIPA) are lobbying for the regulation and licensing of property investment advice. They are trying to clean up the industry and have instigated entry level educational qualifications, ongoing professional development, a code of conduct and advisers can study to become a Qualified Property Investment Adviser (QPIA).
Unfortunately it is not compulsory for advisers to join this organisation but their member base is slowly increasing. They are building awareness of the lack of regulation in property investment advice but at this stage they have been unable to convince federal government that changes need to be made in this area. However, they are hopeful that with the recent change in government, some progress will be made.
In the meantime, if you attend a property seminar (which in many cases is a front for a property developer’s cleverly disguised hard-sell session), ask the so-called “adviser” the following questions:
Are you a QPIA? What qualifications do you have in property or investment? Can you disclose the arrangement you have with the developer of the properties that you are trying to sell?
If they can’t provide you with satisfactory answers to these questions, keep your wallet in your pocket and your hands on your purse.
Well fits in with previous headlines about "property investment attracting dumb money". Dumb and deceitful stealing from the dumb and soon to be dumbfounded!
People, bubble prices + rising enemployment and mining turn down does not equal road to riches. Comprehend ?
MassPsychology
3 Oct 2013, 12:43 PM
If I didn't know any better I'd say this this looks exactly like the type of recruitment model that is used in Ponzi schemes.
Sssshhhhh such logical statements will cause the Australian Real Estate Zombie's heads to explode!
After a bubble has burst, no one denies that it existed. But before it does, the popular refrain is that though bubbles existed elsewhere in the world, “there’s no bubble here”. So housing bubbles are admitted to have existed in Japan, the USA, Spain and Ireland – because they’ve already burst.
In Australia every single man woman and child regards themselves as a property expert. Certainly everyone on this site regards themselves as master class property advisers. Apparently this year property prices will move up, down, and sideways. we will have a crash and a boom simultaneously - yes we are different.
This will be a windfall for ASIC as they will potentially issue 23 million licences in the first 12 months. At a cost of say $500 each per annum that's an extra income of potentially $11.5M every 12 months.
I see a lot of business plans for start ups, but this is wildly better than any other one that I have ever seen. Maybe $10K on a new section on their website - the ROI will make the banks look pedestrian amateurs by comparison. Even Bonney and Clyde can't compete with this ROI.
I'm impressed.
Now if we can just register personal trainers, clairvoyants, spiritual guides, shock jock radio show hosts, reporters, columnists, turf guides picking race winners, and bingo game hosts. ASIC would be rolling in money.
Or we could all just see through the bullshit that comes from all directions in life.
Actually there is way too much regulation in the finance industry. The reason that no one gives any advice on anything anymore is the overdose of regulations that stifle everything. If you go to a bank or an insurance company they won't tell you anything about their products because they don't want to be sued, so they give you a product disclosure document which financially savvy people can easily read, but non financially savvy people will never understand. the more regulations the harder the document will be to understand. it's a perfect way of dumbing down everyone whilst thinking we have helped them - we can now pat ourselves on the back for being far sighted and fair minded.
Only customers who may need advice ask for it, but now they are worse off than before regulations were devised to help them.
Treating the population like idiots with a sub 80 IQ will only encourage them to act like idiots with a sub 80 IQ.
We have dumbed down the world enough already. We have over helped people to their intellectual death.
Now show me that product disclosure statement on that house that you were looking at, lets try and work out what it all means.
Actually there is way too much regulation in the finance industry. The reason that no one gives any advice on anything anymore is the overdose of regulations that stifle everything. If you go to a bank or an insurance company they won't tell you anything about their products because they don't want to be sued, so they give you a product disclosure document which financially savvy people can easily read, but non financially savvy people will never understand. the more regulations the harder the document will be to understand. it's a perfect way of dumbing down everyone whilst thinking we have helped them - we can now pat ourselves on the back for being far sighted and fair minded.
Yeah. The unfortunate reality is that you can't save people from themselves. The whole first page of a property purchase contract in Qld is all warnings, telling you to get a lawyer, "warning - life-destroying consequences contained in this document" - you need advice - are you sure you want to go through with this?, etc etc etc.
Of course people just turn over the page and sign on the line that says they have read and understood all the foregoing. About the only useful part is the cooling-off period.
Maybe there should be a compulsory half-day seminar you have to attend before you can *buy* a property.
The truth will set you free. But first, it will piss you off. --Gloria Steinem AREPS™
Yeah. The unfortunate reality is that you can't save people from themselves. The whole first page of a property purchase contract in Qld is all warnings, telling you to get a lawyer, "warning - life-destroying consequences contained in this document" - you need advice - are you sure you want to go through with this?, etc etc etc.
Of course people just turn over the page and sign on the line that says they have read and understood all the foregoing. About the only useful part is the cooling-off period.
Maybe there should be a compulsory half-day seminar you have to attend before you can *buy* a property.
The contract for renting a property is thicker than the contract for purchasing a property. Surely the seminar for renting a property should be at least a full day.
I put trolls and time wasters on my ignore list so if I don't respond to you, you are probably on it ....
Please don't think that I'm against regulations, I'm not. But the Storm Financial Fiasco and other were all done by industry professionals. They were accredited and licenced financial advisers, I'll bet Bernie Madoff was fully licenced as well.
Your best defence against being defrauded or scammed is by using the grey matter between your ears. Nothing beats a bit of commonsense. I would argue that people become complacent when dealing with a "licenced professional" and the licence only ends up becoming a type of "industry protection" that prevents new entrants into the industry.
Naturally some standards and education barriers are a good idea, but the level of regulations that we already have is a cost that has to be borne by the client, and it won't stop a dishonest player from being dishonest. They are not a cure all.
Any expressed market opinion is my own and is not to be taken as financial advice
Regulated or not, it doesn't matter. They wouldn't be any better.
Surely if an agent or someone makes a statement before a purchase inducing a purchaser to enter a deal, and somehow profiting from it either by commission or directly, they are liable under the existing common law of tort (or contract, if one exists)?
I could see the value in recording every single statement made by an agent, spruiker etc with the date and time written down and the exact conversation. Years later it could be worth hundreds of thousands when a court finds they engaged in fraud or negligent misrepresentation.
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