Fox and Hare’s Jessica Brady and Glen Hare shares five questions that can help investors get the greatest value out of professional property advice and ultimately maximise their wealth-creation potential:
Before seeing any property professional—from a buyer’s agent to a property manager— or forming your investment team, the duo of financial advisers encouraged investors to ask themselves the following questions.
“Chances are they're going to ask you these questions, too,” Ms Brady highlighted.
According to Ms Brady, this is one of the first questions that they ask their clients. By knowing what motivates them, professionals could have narrowed down the list of different strategies that would fit their client’s needs and wants perfectly.
Since motivators varies from one person to another, this question is especially important when the investor is working with a partner.
“Their motivators may conflict with each other, which might cause a lot of financial frustration in your relationship,” she said.
“Understand what's really important to you individually and as partners. It's best to have that conversation before you sit in front of a financial adviser and have an argument about it.”
Once the investor has determined what’s important to them right now, it’s time to broaden the horizon and set specific goals for the short-, medium- and long-term.
The more specific the investor can be about their goals, the better, according to Ms Brady and Mr Hare.
Do you want to retire in 10 years? Are you planning to have your own family? Do you plan to build your own business soon?
By knowing exactly what they want to achieve over the years, the investor allows the property professional to formulate a plan that would connect their current financial position to their desired outcome while considering major life changes that could happen.
Ms Brady said: “What do you want to do? What are your goals? I would really encourage spending a lot of time breaking down all of the different things that you want.”
“We have clients who want to start businesses, pivot their careers and buy property or invest for passive income. When you know that you want passive income, we can help you determine what amount do you need and what can do with it.
“We have one client who has a property portfolio and we're working really closely with them now so he can go and spend some time in France in a few years, knowing that their mortgages will be covered while they're gone.”
While instant gratification is not at all harmful to financial management, Mr Hare encouraged investors to understand the effects of these immediate pleasures to their long-term goals. Ultimately, any decision made today will have an impact on what they could achieve in five to 10 years’ time.
Knowing that property investment could be one of the biggest financial commitments they could make, investors must be aware of how their finances are coming in and going out.
I get paid fortnightly/monthly? Where's it going? How much am I saving? Am I spending on stuff that I don’t actually value?
“Every time that you’re spending money on stuff that you don't value, you’re losing the chance of doing something that you really care about. We often confuse urgent with important,” according to Ms Brady.
Now, more than ever, people are advised to make their money work hard for them since wage growth has grown by only 0.5 per cent over the year.
Mr Hare said: “That salary that you earn, the surplus cash on a monthly basis, if those are just sitting in a bank account, they’re certainly not working as hard as they possibly could.”
Determining their risk appetite can also help investors work better with property professionals since it allows them to determine strategies that can help the investor achieve their goals while letting sleep with no worries at night.
Professionals can also advise investors to take less or more risk depending on other factors that influence their journey, including their finances, current personal situation and goals.
According to Ms Brady: “It should be goals-based risk. The risk of buying an investment property in 12 months is going to be different from the risk of building a portfolio with the goal of retirement in 30 years’ time.”
“Appetite to risk is definitely important but think about your goals as well. What's the time horizon on them? Generally, the shorter the time horizon, the less risk you want to take.”
Finally, before coming to see a property professional and seeking to avail their services, take the time to scan the reviews and testimonials from their clients online or in person.
Knowing the background of the professional and their business can help the investor determine whether they’re comfortable about working with them for the long-term.
Mr Hare said: “Look at their website, Google, Facebook, see who they're servicing and if those people look and feel like you, because advice is exceptionally personal. The conversations that we have with our clients are sometimes conversations that they have with nobody else because money is still something that's a bit taboo.”
“Make sure that they look and feel like they're the type of people that you would wanna work with.”