Property Investment Advice: Real Estate Model Vs Modified Financial Planning Model – The Pros and Cons

By: Rosemary Johnston- Wednesday, May 15, 2013

Property investment advice is an unregulated sector with services currently provided by a mix of real estate agents, mortgage brokers, big property ‘educational’ machines and bespoke services.  Most investors are under educated about the differences making them vulnerable to those with vested interests.

Will future regulation come via the Real Estate sector or a modification of the Financial Planning sector?

Real Estate Sector:

Real estate laws come from each of seven States and Territories.  This has its issues and does not provide uniform national coverage.

The Department of Fair Trading or ACCC is the regulator in each State or Territory.  It does not currently deal with asset investment legislation rather overseeing the Consumer Protection Act, and Real estate Law.

Educational standards for Real Estate people do not include coverage or financial risk, asset allocation, the giving of advice or other skills that may be required.

Importantly real estate law endorses puffery: property claims can be exaggerated to support the attraction of clients.  Hence we have the renovators delight, harbor glimpses and other real estate emotive selling techniques.
Financial Planning

The Financial Services Act provides for Financial Planners to give advice about considered investment in major asset classes.  Many do not realise that it excludes property as an asset class because it is unregulated.

ASIC is a strong regulator with considerable powers and national coverage.  It manages other advice professionals in the Financial Planning and Mortgage Broking sectors.

Educational standards for Financial Planners have been created to provide considered advice for asset allocation and management.  They include risk management and mitigation.

Financial Planners are effectively licensed to provide services about regulated products from regulated providers.  As a result they provide facts with dates from reputable sources.  Ideally these are professional and transparent.

Property Investment Advice

This sector needs laws with national coverage to avoid the work around of the many groups selling property in one state and performing the transaction in another.

It needs a strong regulator to support the elimination of the unscrupulous providers who have been overusing puffery and working concurrently for the vendor and the buyer.

The right to give Financial Planning, Mortgage Broking, Legal and Accounting advice are all based in the same principles: an educational qualification, professional indemnity insurance for the advice, and membership of a professional association with an approved code of conduct.

Pseudo regulation of the property may come from an approved process of assessment with factual dated information that enables comparison of ‘apples and apples’ for considered investment.

If you are interested in knowing more about how PIAA supports these principles through its education, PI insurance application and membership to support you being regulation ready please contact us at or 0411 382312.