FINANCIAL planners are ignoring opportunities recently created by the introduction of the Managed Investments Act, capital gains tax cuts and the current defensive investment environment, a market review by Property Investment Research indicates.
They are missing out, and have not caught onto, a property investment market with one million investors and more than $180 billion in funds.
The PIR review, Unlimited Business Opportunities in Property for Financial Planners, recommends that financial planners should be advising their clients that 10 per cent to 40 per cent of an investment portfolio be in property.
PIR managing director Richard Cruickshank said that, exactly how much should be invested depended on the individual, their goals, their risk tolerance and the state of the market.
“There will be increased demand from investors for high quality independent research, specialist advice and accountability, which has previously been virtually non-existent in that area,” he said.
Mr Cruickshank said opportunities open to planners stemmed from hundreds of real estate and mortgage schemes now having to be licensed under the Managed Investments Act, therefore falling under ASIC supervision.
“The Managed Investments Act has been positive because it gives more protection to investors through prospectus offers and financial planners can now give professional evaluation and advice on all types of property investment for their clients,” he said.
Mr Cruickshank said one of the hang-ups planners often had with property was that it was less liquid then other asset classes.
“Many investors and their advisers overestimate liquidity,” he said.
“How much you really need depends on the individual, but I’d suggest that you don’t need more than 50 per cent liquidity.
“It’s also worth remembering that investors have many choices in property beyond direct investment. Listed Property Trusts, for instance, are highly liquid and allow diverse investment in big-ticket commercial properties that would be inaccessible for direct investment.
“There has also been significant, steady growth in property securitisation, leading to a range of new investment vehicles available to planners and investors.”
Financial planner Harvey Pacific Financial Services managing director Annemieke Sutton said the tax changes shouldn’t affect an investment decision.
“If you are only worried about capital gains tax then you are not really buying value,” she said.
“Do you buy properties or any other asset to lose money on it?
“It should be good in its own right. Always look for properties with a competitive advantage with recurring earnings run by capable managers.”
