Not All Investment Advisors are Created Equal: How to Choose a Property Investment Advisor
00:00 – Introduction to the Show
01:12 – Identifying various advisors
02:30 – Identifying relevant skillsets and experiences from advisors
06:58 – Not falling for irrelevant metricsRead More
08:07 – Building an appropriate network of mentors
11:23 – Outro
Cheat Sheet – https://inkosiwealth.com/strategy-cheat-sheet/
You need a team of property investment advisors who you can tap into to help you make the right choices and conduct the best due diligence to make the best investment decisions. From property managers to conveyancers to buyers agents to accountants to property investment advisors, the list goes on.
There was a tool I created many years ago that was specifically designed to help teenagers understand that in the world of wealth creation, there is a range of people who are ‘experts’ on the topic of wealth.Read More
The framework I developed helped them pull apart different skillsets from each advisor. There were roughly 15 types of advisors, and we would tease out all the various skillsets that each of these professionals had.
The point of this exercise was to help convey that not all advisors are equal. Depending on their skill set, experience and expertise, there are varying levels of bad to great advisors out there.
Experience in an Advisor
The spectrum of experience in an advisor must be considered.
I often get categorised as a property investment advisor, but I’ll tell you that there are no formal professional qualifications to become one.
Only in the past four years has there be some additional vocational study options for people to be considered a ‘certified’ property investment advisor. But my point is that anyone can call themselves a property investment advisor and launch a business.
So how do you ensure that the property investment advisor you engage is right for you? I boil that down to two questions:
1. Do they invest in property themselves?
2. And if so, what stage of the investment journey are they on?
These people should either have the results you want or they have a specialised skillset in helping you achieve what you want to achieve.
Skillset in an Advisor
Being a Chartered Accountant for 25 years, I can tell you with absolute certainty that most accountants do not understand what it takes to create wealth.
Accountants are trained to account for wealth and help you structure for tax effectiveness, but they don’t help you with the actions in creating wealth itself.
Unfortunately, many accountants I know, despite the image they project, are not necessarily wealthy themselves.
From personal experience, with the best of intentions and wanting to support their clients, advisors will often project or give the impression that they’re experts across all aspects of wealth creation.
The key point to understand is that each profession has a series of specific skills for their profession. Outside of this, they may not necessarily have any further skills that can assist you.
To be an astute investor, you need to understand the limitations of expertise and experience in different advisors. By teasing out these difference, you’ll have a much easier time finding a suitable advisor.
For beginner investors and even more experienced investors, it can be hard to discern what advisors are suitable for you. But I recommend you to try your best in understanding what specific advisors do and don’t do.
I’ve got an alternative investment strategies cheat sheet that you can download to help you with this.
Measuring the Right Metrics for Property Investing
One thing that bothers me about the current cohort of property investment advisors are that they manipulate data to tell a story.
In Australia, our metrics are so far out of whack – our property market is great for generating capital but poor for cash flow when you compare this to the rest of the world.
What this means is that many of them focus on gross yield (income before expenses) rather than net yield, which is a poor metric to measure. In the world of businesses, no one looks at gross income instead of profit, so why doesn’t this principle apply with property investing?
Know your metrics so that you don’t get the wool pulled over your eyes.
Build the highest calibre of team to support you.
In my personal investing journey, there’s not been one singular individual that’s had the biggest impact. Instead, it’s the collective impact from a group of people that have helped shape my investing strategy and given me access to a new way of investing.
List out the people you know that you rely on for advice and rate them in terms of technical competence and whether they have the results you want.
The job of a good advisor is to help you make better decisions. Some key questions to ask:
– Do they make things complex or simple?
– Do they make my life harder or easier?
– Do they use jargon?
– Do they focus only on compliance, or do they add value?
– Do they help you maintain the status quo or focus on growth?
And as you move further along your property investing journey, you’ll start to realise that no single advisor is a one-stop-shop for you and it requires a team of trusted advisors to do this.
The quicker you realise this, the faster you’ll move forward with building out the missing pieces in your team and increasing the trajectory towards financial freedom.
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