Beware Investment Property Sales Pretending to be Financial Advice


A couple of weeks ago I received a phone call  from a call centre in the Philippines suggesting that I might qualify for tax savings from the ATO for this financial year.  All I needed to do was to answer a few simple questions about my household income, home ownership status and level of borrowings.  Having a few minutes to spare (and being a bit curious), I did as asked and “Congratulations!”, I found myself eligible for a personal report, to be delivered to me by a finance professional that would explain how to reduce my tax.


I was visited the next day by a young man with no financial services qualifications or licensee credentials whose job it was to spruik the potential tax benefits of purchasing an investment property.

It was not a very long meeting.

Now I am not saying that investing in property is a bad idea.  What I am saying is that the decision to make any sort of investment should be taken as  part of a well thought out financial plan that takes into account the full scope of your situation including your future goals, aspirations and preferences.  Sound advice cannot be justified by the promise of short term tax savings alone.

A few Google searches later and I had pieced together that the young chap’s employer is in fact a property development company and the whole purpose of the exercise was to find purchasers for the buildings they are constructing.  This is what marketers refer to as “vertically integrated distribution” and means that the same organisation can pocket all of the profits and margins every step of the way.

They can make a profit on the sale of the property, take a commission on any loan finance they organise for the purchaser as well as any associated insurances they recommend.  Selling their developments in this way allows them to set the purchase price without it being actually tested by the market (unlike if you purchase at public auction for example).  The whole scenario is one big conflict of interest.

A fee for service financial planner should never be tempted to begin with an answer already in mind, or to try to construct a situation where a particular product can be made to seem appropriate.  The client’s best interests should always be top priority.

© Summation Strategies 2016.

Please note that all information provided is of a general nature and does not take into account your current financial situation, needs or objectives.  Before acting on any of the information you should consider its appropriateness, having regard to your own objectives, financial situation and needs.  We recommend those seeking insurance or making an investment obtain financial advice specific to their situation and consider the Product Disclosure Statement prior to making any financial investment or insurance decision”.

Beware Investment Property Sales Pretending to be Financial Advice
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