Financial advisor kickbacks.

Discussion in 'Financial Planning' started by Peter Carter, 21st Apr, 2017.

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  1. Peter Carter

    Peter Carter Active Member

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    Hi everyone.

    So a work colleague has just told me that his financial advisor is trying to get him to purchase an investment property on the outskirts of newcastle for roughly $400,000 and has told him it would be rented fairly quickly. She says she isn't charging him a few though. So is she only doing this to get a kickback from developers or something ?

    Also, this colleague is interested because he is fifty years of age with no kids or wife and takes home around $1000 a week and owns his current home outright and it is valued at $380,000.

    What would his next best investment move be?

    Thank you.
     
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  2. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    not enough data to really make a helpful comment.......

    Skirts of newcastle could be west Maitland .............

    ta
    rolf
     
  3. DaveM

    DaveM Well-Known Member

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    A good pair of shoes to run away as fast as he can
     
  4. Peter Carter

    Peter Carter Active Member

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    House and land package in Thornton Rolf. If not this investment in his situation, what is his next move.

    You in the newcastle area. I just bought my first home in wallsend
     
  5. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    She is possibly receiving a $40k kickback. Best to probably avoid purchasing if something like this is going on and better to ditch the so called advisor.
     
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  6. Peter Carter

    Peter Carter Active Member

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  7. Peter Carter

    Peter Carter Active Member

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    What do you think his next investment move could be at his age and owning his house outright.
     
  8. Jess Peletier

    Jess Peletier Mortgage Broker & Finance Strategy, Aus Wide! Business Member

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    Investing in property is fine - just not through his advisor. She gets a large commission which he will pay for, and these types of properties are very often over priced, and poorly structured. The worst part is the investor thinks it's great until they realise it's worth a fraction of what they paid for it and can't offload it with out taking a hit.

    It 'may' not go that way but best he goes in with eyes wide open and know the right questions to ask.
     
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  9. DaveM

    DaveM Well-Known Member

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    See a financial adviser more interested in making their client wealthy than lining their own pockets
     
  10. Savy mum

    Savy mum Well-Known Member

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    A house and land package in Thornton for $400k is a bargain. Maybe very small house with not much land. Id be looking further into this
    I live in Thornton. There are a lot of houses for rent here with all the new land estates popping up everywhere
     
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  11. Cactus

    Cactus Well-Known Member

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    There is typically 5-6.5% commission in packages, not all paid to one person either sometimes shared over a couple involved in the sale. It's not much more than a standard commission. Be less worried about the commission and more worried about the value of the proposition and whether it fits the financial plan/goals of the individual. If it doesn't ask why it's being presented and probably better to find a new adviser.
     
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  12. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    I have no idea and wouldn't want to advise on where or what to invest in.
     
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  13. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    Financial advisers, accountants and other professionals are bound to ethically and professionaly disclose conflicts of interest and clients best interests.

    Ask them. Financial advisers have a specific requirement to disclose all remuneration methods in a adviser profile and also is written finalcial advice. Suggesting your purchase if advice and caught.

    We occassionally recommend a property adviser. If we do we rebate 100% of any fee and hand it to the client and tell them that If we do any work we charge a fee the client agrees to. Its often a smaller sum - HUndreds v's thousands. Cannot be better transparent. If we didnt our financial adviser license would be at risk and its not hw we make money. We dont take money if we dont do work.
     
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  14. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    Financial advisers arent licensed to give property advice. That real estate advice. Or unregulated.
    Its so hard to identify sharks. Some property people are great.
     
  15. tobe

    tobe Well-Known Member

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    I thought financial advisers aren't bound to disclose direct property comm as it's not a 'financial' product?
     
  16. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    Client best interest rules say otherwise. When they walk in seeking license financial advice its caught. From that point all discussion is caught.
    ASIC would run out the noose.

    ALL advice becomes regulated even if the product is not. Eg financial advisers arent tax advisers but when they give tax advice as part of advice its becomes regulated and they now also need to be registered.

    If you want to test that view report them to ASIC. Imagine if a property adviser gives smsf advice to buy property in a smsf. Same issue
     
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  17. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    There are many financial advisors that give property advice. There is no licencing required. A real estate licence is only needed if selling g property
     
  18. Archaon

    Archaon Well-Known Member

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    Land is currently 219k as a minimum in the new areas of Thornton, so a H&L package for 400k sounds cheap.

    I'd look further into it, which builder, size of block, location, size of house, etc.

    Also make sure it is a turn key fixed price contract, otherwise there could be alot of extras to pay for.

    Regards,
    Arc
     
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  19. Chris Au

    Chris Au Well-Known Member

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    Got to look into the wider market economics. If there are a lot of houses for rent (check re.com.au or other sites that have vacancy rates), what will the advisor do to get this one rented quickly. What are the economic and employment drivers of the area? Are they able to get a loan in the current environment? Who will this house appeal to and what would that tenant be willing to pay in rent? Will it be CF+ or -ve.......
     
  20. Archaon

    Archaon Well-Known Member

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    There is major business estate at the end of the M1 that is ever expanding, alot of jobs being created no doubt, which is within 5km of the land for sale in Thornton.

    There are also massive estates being erected, as well as expansion and investment in the Glendale shopping centre.
     
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