Real Estate Agent AND Financial Advisor HYBRID -- thoughts?

Question

Hello everyone,

I'm considering leaving my company and going independent as a Financial Advisor.  With experience as a Mortgage Banker in my past, I naturally have real estate conversations with my clients and think I can provide a whole new level of service to them by having duel registration as a Financial Advisor AND a Real Estate Agent.

Does anyone have any experience with this?  I understand it may pose a conflict of interest, I'm unsure whether or not my compliance department would even allow for this and have no idea whether or not a RE Broker would allow this.  All I know is that working Real Estate part time for my clients could turn into a great retention strategy and, in turn, may help expand my business.

I've researched all over and have found very little on the topic.  Any advice is appreciated!

Brandon Schneider · Answer

Hi Everyone, I'm so glad to see that there's a conversation around this. I'm a 22 yr. old who is close to beginning a FA training program with Edward Jones. However, I have been having serious second thoughts about my initial ambitions to go into Real Estate. Then I thought, well why can't I do both, which after some searching brought me here. I was hoping some of you could offer some wisdom into this situation and help me address some concerns. I.e. Can I become a FA and also get into Real Estate? Is it practical and has it been done successfully? Etc. Thanks everyone, this would really mean a lot to me. I'm nearing decision time. Best Wishes to you all.

Chris Soignier · Answer

Ever hear the phrase, "Jack of All Trades, Master of None"?    That's the first thing that came to mind while reading your post.    I think it would be better to pick one, then establish a relationship w// those on the role you don't pick, and refer leads as appropriate.

Don Konipol · Answer

I have no problem with people selling life insurance, real property, investments, etc, on a commission or sales result compensation basis.  I just don’t like when they disguise themselves as advisors.  Advisors should have a fiduciary responsibility to provide unbiased advice to their clients.  Being compensated on product sales negates this.

Now, you could do both without conflict if you do not get compensated as a real estate agent when you advisor clients purchase real property.  So you would have to operate as two separate businesses with no “cross over” synergy.

V.G Jason · Answer

There's nothing more that I hate than my real estate agent giving me financial advice.

If they knew, they wouldn't speak. Maybe I should be a bit louder in my appearance, but I hate the attention. Most agents really aren't on par, or above the investor they talk to. And if you're talking to a regular folk trying to buy a primary, they are basing it off emotion and the lender has cut them off at the financial end.

Tram Nguyen · Answer

@Diane Cohn Hi Diane, thank you ahead and apologize for the intrusiveness. I see your response about your RIA allows dual registration. I am quite curious if I can have some information about it. I am a FA incoming and also former RE sales. I was told one hat is better.

Shenell Caldeira · Answer

I am a licensed financial professional and a realtor and I went back to being a part time realtor because I knew the value that we could provide to our community through financial education and helping families reach their financial goals especially if one of them is buying a home or later investing in real estate.

Diane Cohn · Answer

@DanielCooper—if you're still looking to combine these two careers, an independent RIA like the one I work for may be able to accommodate you. I don't think most real estate brokers would have a problem with this type of dual licensure. More likely, they'd see it as a fantastic pipeline for bringing clients to the table.

Other commenters are correct about not spreading yourself too thin, but if you align yourself with a firm run by a talented portfolio manager who manages the investments, that frees you up for client relationships, including real estate activities. Such activities have to be disclosed on your ADV, but as long as your firm doesn't view it as a conflict, it's entirely permissible. Our firm is hiring in key states, if you're interested.

Diane Cohn · Answer

Dan, that's an interesting point. As an agent you're taught not to make promises about market performance for the very reasons you describe. As a financial advisor, you also cannot control the market and are even more highly regulated, so the only way to protect yourself is via comprehensive disclosures and disclaimers (see all the fine print at the bottom of any investment offering for an example).

If you're both the agent and advisor, there is a potential conflict of interest if you get paid a commission for selling them the house. That must be disclosed. And no, you can't control the market, people do lose money on real estate, so that must be disclaimed.

Financial advisors have the added responsibility of suitability, which means only recommending products suitable for the client given their age, experience, financial situation and tolerance for risk. Real estate agents aren't required to know this. They just need to know if you can get the money, not whether or not it makes sense in your greater financial picture. So, yes, combining the two might be valuable, but the trick is to stay compliant with multiple sets of regulations at all times.

Real Estate Agent AND Financial Advisor HYBRID -- thoughts?

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