‘Spruiker' vs Advisor
What is the real difference between a spruiker & a property investment advisor?
The underlining difference between a ‘spruiker’ and a qualified, property investment advisor, is a simple question of what comes first on the agenda; strategic planning, or deciding on a property.
A spruiker will inevitably push a client towards an individual property from the get-go more often than not via a highly energetic seminar or presentation with glossy marketing material. At the other end of the spectrum, a competent fact-based advisor will start by looking at the client’s key goals, current financial situation and knowledge before establishing the foundations of a customised strategy. In fact, the client’s goals are generally converted into a numeric and time-bound objective such as the desire to generate a $2000/week passive income in approx. ten (10) years. Starting with the end in mind and working backwards, allows the attention to be on assessing the holding costs required and ultimately providing a more measured position when selecting adequately suited properties.
Research is the next fundamental step in the sequence for adequate property investment advice. Accessing quantified research from independent sources enhances the impartiality for the client’s best interest and provides reliable references to any statistical data quoted. Such research should then support the three pertinent questions for diligently assessing your property selection… WHERE to buy, WHEN to buy, WHAT to buy?
A spruiker is commonly renowned more for their one-dimensional focus solely on the positive aspects of their pre-selected properties. Probably more directly referred to as a ‘biased viewpoint targeted towards their own benefits’. This really exposes another essential difference between the two, being that spruikers focus exclusively on the property and advisors focus exclusively on the client. It’s that simple!
A key consideration nonetheless is that one should not convolute the reputable work that ethical licensed real estate agents conduct in providing owner occupiers in particular with a choice of quality dwellings. These professionals have a very important role in the property market and can also be indirectly tarnished at times by unscrupulous spruikers.
The final point of consideration that differentiates a spruiker from an advisor is the way in which each is paid. That is, a spruiker either charges no fees whatsoever due to being paid directly by the developer as commission for selling the listed property or they charge a questionable service fee as part of the settlement disbursements. In this instance the fee may not be disclosed upfront and sometimes not at all. At the very least this raises a conflict of interest skewed in favour of the spruiker.
The genuine property investment advisor will operate under a fee-for-service structure with complete transparency on all fees, relationships and referral arrangements. These are generally provided in a clearly articulated document known as either a Statement of Advice (SoA) or Statement of Property Investment Advice (SoPIA). Should clients wish to also have the advisor source an investment property, then an additional fee may be charged for buyer’s agent services or alternatively a partial reimbursement of previous fees charged may be negotiated as well.
In conclusion, property investment advice is nonetheless an unregulated sector in two ways. Firstly, for the advice that is given, and secondly for the claims that are made about the property. An ethical client-focused service provider of property investment advice, will comply with a number of external standards albeit voluntarily. These should strongly reflect the Government’s latest legislation for Financial Planning standards as described in the FOFA legislation, as this sector moves closer to advice professional business standards.
CODE Wealth is proud to lead by example in the practice of ‘client’s best interest’. All Advisors hold recognised educational qualifications for property investment advice and conform to the code of conduct guidelines as set out by the Property Investment Association of Australia (PIAA). Professional indemnity insurance is currently offered as a bespoke policy to each business applicant. CODE Wealth has applied and achieved this policy based on its business processes, published operations manual and considerable business experience in risk management practices. This insurance requires its advisors to comply with professional advice standards. This means the collection of accurate client information; the presentation of factual property information with dates and independent sources; and, contemporaneous notes for each client meeting plus documented personalised investment strategies.
So with all things considered, if you required knee surgery would you seek help from a massage therapist or an orthopaedic surgeon? Then, who would you choose for helping you achieve your personal goals through property investing …a spruiker or an advisor?
Paul Gomez - CEO
CODE Wealth Pty Ltd