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Making the most of the SMSF wave

by 11 minute read
Making the most of the SMSF wave

As mortgage brokers we are certainly intimately aware of Australians’ love affair with bricks and mortar.

So with the introduction of specialist finance arrangements for SMSF’s it has been little surprise to me that this new pathway to direct property investment has stirred the interests of so many Australian households, bringing with it a wave of new opportunities for mortgage brokers to apply their professional skill set in this area.

However, in spite of property’s burgeoning position within the SMSF territory, it has raised new compliance concerns and brokers who are looking to capitalise on this market must investigate their options carefully.

While property is not classified as a ‘financial product’, according to the Corporations Act, SMSFs are and thus only those practitioners licensed to provide advice on ‘financial products’ can legitimately advise on the suitability of establishing an SMSF.

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This means that only qualified financial planners and accountants can offer advice regarding the suitability of an SMSF.

If you’re a qualified and licensed mortgage broker however, you still have a very important role to play, in terms of financing an SMSF transaction.

And with more and more lenders moving into this space, becoming educated around these new products is a great way to strengthen your service offering to a wider consumer base

So if you can advice SMSF clients on borrowing options, and planners and accountants can advise on the actual suitability of an SMSF, who can advise SMSF trustees about which property might be an appropriate investment selection?

Unfortunately, a lot of practitioners within this space lack the genuine expertise to provide such advice. Even if you think you know a thing or two about property, unless you have professional qualifications, you should avoid making any recommendations regarding property selection.

But brokers who want to broaden their SMSF service proposition have several options they can employ so as to help their clients make smart SMSF property investment decisions and broaden their service offering.

One, you can diversify your business to encompass property investment advice and bring in a qualified property investment adviser as well as buyer’s agent.

Your second option is to up skill yourself and gain a formal accreditation as a property investment adviser. This is obviously a great way to boost your individual service offering, if you have the time and resources to do so.

Finally, you could consider a referral partnership with a property investment company – essentially delivering an expanded service to your client, without completely diversifying you or your business’ offering.

Remember, diversifying can be challenging, and any expansion of your existing fields of expertise requires careful consideration.

Think carefully about developing any greater SMSF services, as the lending requirements for SMSF lending are technical enough in their own right.

But if you are considering broadening your reach, be sure to select the option most suitable to you.

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