How compliance networks catch out the sharks

It’s time for me to climb onto my soapbox, because there’s an issue so close to my heart, it compelled me to start a business.

As a property professional who also invests, I’ve seen the wonderful results our industry can deliver to everyday people. Folk who are simply looking to achieve a comfortable retirement, free from financial struggles and a reliance on the pension.

It’s one of the most satisfying aspects of my role. Watching newly minted landlords grow an asset base and move toward their goals.

There is, however, a flip side to this industry. An unfortunate element that stems from a lack of regulation around real estate investment advice.

And it’s that anyone can start a business and call themselves a property investment advisor. They’re then free to feign a level of expertise designed solely to draw in paying clients who may hand over tens-of-thousands of dollars in the hopes of achieving financial independence.

Two types of sharks

There are two types of these ‘sharks’ that patrol the advisory waters.

The first are people who’ve convinced themselves they’ve discovered the ‘secret sauce’ for building wealth through property, and decide to sell their ‘knowledge’. These sharks seem to genuinely believe that after making some equity gains in a rising market (purely due to the luck of timing), they’ve gained enough expertise to charge for their services.

Ignorance is bliss in this case, but clients who back them will eventually come to understand the financial danger of their advisor’s shortcomings. These sharks are undereducated in the space and skipping past the rigours of good governance.

The second type of shark is pretty much a purely self-serving narcissist. This is an advisor whose sole motivation is to maximise their profit at the expense of their clients. They will happily take secret commissions, promote useless seminars, buy sub-standard properties and generally operate without conscious all in an effort to make themselves richer.

Unfortunately, the risks of dealing with a shark are multiplied in the new-build space. The supply chain of professionals collecting commissions seems to lengthen in the construction sector. It’s been an area with of rich pickings for anyone looking to fleece investors out of a few thousand dollars.

The safety net-work

Until the powers that be can legislate to regulate this industry appropriately, there’s precious little protection for consumers. And even if regulation comes into play, I suspect the bar will be set so low that most snakes will easily slide over it.

And so, we’ve been left to self-regulation, with clients being the ultimate and unfortunate ‘litmus test’ victims as to whether or not they’ve dealt with a shark.

In this environment, having an organisation that filters out the nasties and gives support to investors is paramount.

This was the impetus for creating the ASPIRE Property Advisory Network (“ASPIRE”).

The ethos behind ASPIRE is simply to establish a set of guidelines which ensure investors receive excellent service, support, guidance and advice. We are not an investment advisory business. Rather, our clients are the independent advisories who must meet strict compliance guidelines before they can operate in the ASPIRE Property Advisor Network as an accredited Advisor. By utilising our custom build technology platform an advisor and ASPIRE record and communicate all information in the platform.

 High standards

We have a rigorous compliance protocol and code of conduct for our advisors to become accredited.

Qualifications/licences/insurance

Each must meet minimum requirements in education. This includes completing our induction and training course, completing the Property Investment Professionals of Australia (PIPA) QPIA course, hold a real estate licence and a certificate IV in finance. This education requirement, along with adhering to our code of conduct are the requirements to be an ASPIRE Property Network Accredited Advisor.

We are also adamant our advisors take out Public Indemnity (PI) insurance specific to property investment advice. This is not a basic real estate PI policy, but one that covers the proffering of investment advice in the property space.

All these elements require a commitment of time, money and effort for the adviser. That’s exactly why we insist on our partners committing to them.

Training

We also believe advisors should seek to continually advance their skills. ASPIRE provides ongoing training and support to our Advisor in the network.

Our advisors are ethos is to spend as much time on assessing individual investors goals and resources as they are about locating and securing property investments. This is highlighted by our 14 step process where property selection is step 11 of 14!

Ill-informed advisors simply adopt a one-asset-fits-all approach to investing by focussing on the property and not the investor. This is riddled with risk.

Governance

Finally, our network is all about governance.

We do not accept any advisor who refuses to meet our standards.

Since establishing ASPIRE, we have had a large number of applicants approach us looking to come under the ASPIRE umbrella. Once we set out the rigours of meeting our benchmarks, many don’t proceed.

And once you’re in, it doesn’t stop there. ASPIRE advisors must continue maintaining a high degree of client-focussed quality which stand up to scrutiny, or risk removal from our network. 

So, here’s my call. A well-governed network with a rigorous set of principles where members are held to the highest standard is a must in today’s property investment space. The risks are too great for the investor’s long-term financial future.

Feel free to contact us and we can connect you with a local independent advisor.

Richard Crabb | MD ASPIRE Network | PIPA Board Member
Author: Richard Crabb | MD ASPIRE Network | PIPA Board Member

QPIA® - Qualified Property Investment Advisor | Licensed Real Estate Agent - VIC: 082760L - SA: RLA 292544 - QLD: 3579879 |Diploma of Financial Planning |Active Property Investor | Board member of PIPA - Property Investment Professionals of Australia. Richard is the Founder and Managing Director of the ASPIRE Advisor Network. After an extensive career in corporate finance and through his personal investing experience, Richard identified the need to create a system and framework that supports ethical, independent property investment advisors who operate in the new property market. The ASPIRE Advisor Network now supports independent property advisors across Australia by providing their business engine and acquisition process, designed around concepts of future compliance in the brand new property sector. Richard together with the ASPIRE team has also developed a complete end to end software platform, which is leading the way to deliver property investment advice in the new property space. Our goal is to work with investors to implement their goals and objectives buying investment properties across Australia, utilising a structure and information-rich end to end experience.

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