Only fully accredited advisors under the FSR regime can provide a Statement of Advice, which lists recommendations to the client, based on the considerable investigations, which have been done to this point.
The equivalent document for Property Investment Advisors is commonly known as a Property Investment Report.
If the client has given you permission to proceed toward preparing a Property Investment Report, this consultation will be held to deliver this report. The progress of this consultation will depend upon the role you are undertaking. Where you are providing advice and guidance only, the Property Investment Report will outline the recommendations in a general fashion as to how the client should proceed. It is likely to recommend numbers of properties which can be purchased in a set period of time, ultimate potential passive income and an overview of the speed with which personal and other debts can be repaid. The report should also include a complete outline of all associated fees and charges from all sources, be they financiers, other professionals, or the advisor themselves.
Where you are recommending an actual property purchase, the Property Investment Report will refer to this property and include a disclosure of all benefits you are to receive from the recommendation, including any commissions, soft or hard dollar rewards or other developer incentives and financial windfalls they may be receiving. It should also include a note advising that the recommendation is limited to the stock available to you and does not include all possible stock available in the country.
Generally the report will include:
- The current position of the clients in terms of their assets and liabilities, income and expenses.
- The objectives of the client in terms of their financial goals, such as time till retirement, desired net worth or desired passive income level.
- Other factors taken into account in the recommendation (risk tolerance, past experience, property types to avoid etc.)
- The strategy to be employed to meet objectives, in detail, including all costs and time frames.
- The specific property to be recommended, if recommending actual property, including all of the details.
- An action list detailing the next steps to implement the strategy, including any time-frames which may be imposed.
- An ‘Authority to Proceed’ which includes a statement attesting to the disclosure of all fees and charges, signed by the client
- Legal disclosures and disclaimers which should be in normal sized font, in a prominent place at the beginning of the report, marked for the attention of the client.
- Financial projections and investment forecasts, including methods used to calculate and disclosing all interest rates used.
The written report includes all data relevant to the decision to invest in direct property and to the specific property that has been recommended. Details of the recommended finance arrangements should also be included and the basis for these recommendations.
You should go through this Property Investment Report/Statement of Advice with your client, explaining each part of the recommendation. The client should then be provided with time to absorb the information from this report and not be pressured into agreeing to proceed further at this stage