Achieving a ‘model’ portfolio in property is difficult if not impossible because of the singular high cost of each property. If you recommend an asset allocation to property of, say 20 per cent it is certainly impossible to acquire multiple properties unless the value of the underlying portfolio is in the millions, or a very large debt is created.
There is another group of potential clients who are in desperate need of good advice now and have the opportunity to become your high income accumulator and wealthy retiree of the future. These are the young family.
Asset allocation is an investment strategy designed to balance risk and reward by diversifying across the major asset classes – property, equities and cash/fixed interest – each of which performs differently over time, known as cycles. When one asset class is up, another may be down.
Fractional property investing (FPI) is a method of acquiring an interest in real property of the investor’s choice without having to purchase the whole property.
While the focus for a large number of accountants at the moment is ensuring they have a solution for the removal of the accountants’ exemption, it is also important that they think about how they will meet their professional obligations when providing financial advice.
While accountants are weighing up their licensing options, their clients may already be on the move, unwilling to wait for their accountant to provide them with a wider range of financial advice services.
I recently had an interesting chat with a very clever friend of mine who has been in the financial services industry for what must feel like a life time. They expressed their frustration at trying to explain to their board why the SMSF market was not a channel that could be harnessed.
With less than two years to go until the accountants’ exemption is removed, only a very small number of accountants have applied for a limited licence. While this may demonstrate in-action by accountants, it might also indicate that accountants continue to be confused about what is involved in moving to the licensed regime and how to select a solution that is the right option for their business.
As an accountant, you probably have a number of clients with self-managed super funds (SMSFs) who are aspiring to an accumulation of wealth after a lifetime of hard work and diligent saving.
Accounting partners are well aware of the Future of Financial Advice (FOFA) legislative changes related to offering advice on self-managed super funds (SMSFs) and the removal of the accountant’s exemption which allowed them to provide advice on setting up SMSFs without the need for an Australian Financial Services Licence (AFSL).
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