How to spot a bad financial planner

After what seems like a long period of saving money, you decide to put it towards an investment. You approach your financial planner and propose the idea of investing in a property. The financial planner is hesitant and suggests that it’s not a good idea.

Should you find yourself in this scenario, it’s no reason to panic or put off your property investment dreams. A financial planner’s concern about direct property investment may have more to do with their lack of knowledge in this area, as opposed to the asset class itself, says Owen Davis, of DFG Property Services.

“It’s natural for experts to stick to what they know well and are comfortable with. Many of the more traditional financial planners aren’t licensed to say, ‘go buy that actual property’ so they’ve never really developed an understanding of direct property.”

“Direct property investment is now firmly in the mix for most financial planners when crafting investment strategies for their clients. Clients can purchase properties in their personal name or inside their Super."

Owen says it’s best to interview more than one financial planner about the types of investment strategies they specialise in.

“Like any professional advice, always get a second opinion before making major decisions and ensure you understand what’s being recommended.”

So what sort of characteristics should a good financial planner have?

Well, a good test is to ask the financial planner ‘What’s your opinion on direct property investment and using my super to invest in it?

If you see any of these telltale signs, Davis says it’s best to move on to somebody else:

They look blank or seem vague.

This is an indication they are uncertain or inexperienced with direct property investment.

They dismiss the idea outright.

If there’s no explanation of why it’s a bad idea for you specifically, they may be doing what’s easy and comfortable for them, rather than what’s best for you.

They say it’s a great idea, without saying why.

This can be a sign of a planner who is too eager to please and isn’t taking into consideration your personal circumstances before allowing you to invest.

“A good financial planner is always focused on what’s right for your personal circumstances, and they will make a concerted effort to find out what those are before giving advice,” says Davis.

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