Avoiding property pitfalls in an SMSF practice
SMSF practitioners should give careful consideration to their property partnerships to avoid serious consequences.
With SMSF property investment demand growing by the day, it makes sense for practitioners to do their best to ensure their clients make smart SMSF property investment decisions.
One option in incorporating property advice into your business is involving a property investment specialist. However, with no regulation of property investment advice, you’ve got to be diligent to ensure you are working with a professional operator with whom you can trust your valued clients.
The same goes for any referral partnerships with property developers, builders or sales agents.
Some – in fact, many – operators within this space might offer attractive monetary incentives for your referral, but these could be at the risk of your client committing a chunk of their nest egg to a poor performing property.
So if you’re looking to incorporate a property referral partner into your business, here are a few factors you need to consider:
1. Exactly what are they offering? Is what they are selling/promoting going to be of realistic benefit to your clients? Put yourself in your trustees’ shoes.
2. Do they have genuine expertise and qualifications? Do they offer independent property advice?
3. Are they credible? Don’t take their word for it; research and ask around. Ensure they’re members of the relevant industry associations and find out which other businesses they’re partnered up with. Like often attracts like, and one dodgy operator will often be connected with another.
4. Are they interested in a relationship that’s beneficial to you and them or are they client-focused? Authentic client focus will always deliver the best rewards for you both in the long term.
5. Are they transparent about commissions with their clients and are they willing to be upfront with yours?
6. Do their commissions appear too high and potentially unjustifiable?
Remember, referral partnerships are a fantastic way to extend your service offering and building new revenue streams, but selection of any referral partner requires thorough consideration.
Not only do you need to look out for your clients, you must also consider your own business and personal reputation. Just one bad connection could have serious consequences for your business.
Ben Kingsley, chair of Property Investment Professionals of Australia (PIPA)