Does Your Financial Planner Recommend Real Estate?

Question

I am considering a career change into the financial and retirement planning profession for my day job. From what I understand so far, I think that being a CFP who understands and recommends real estate would be a good way to differentiate.

Do you agree?

I'd love to hear from any Certified Financial Planners or financial advisers here on BP.

Thanks!

Do you agree?

I'd love to hear from any Certified Financial Planners or financial advisers here on BP.

Thanks!

Chris Lopez · Answer

@Scott Scharl My degree is in financial planning, but I never pursued it as a career as I started building a business in a different industry. A few years ago when I stepped away from that business, I looked at becoming a CFP because I enjoy helping people with their finances. I didn't move forward with it because I couldn't find a good way to monetize and scale the business. A lot of CFP's make their money from selling future funds or AUM.

Well, I invest in index fund. I don't make any money selling them nor feel that I need to charge a 1% AUM fee to "manage" a client's stock portfolio. I didn't see a clear path by being a fee based planner either because there was no way to scale it without it being directly tied to my time.

So I didn't move forward with it. I became a RE agent instead and like it a lot more. I still help people with modeling, but can make money from selling a good asset (an investment property) rather then a front loaded mutual fund.

What's your plan to monetize it? That was always my million dollar question.

Make sure you check out what @James Orr is doing with his Real Estate Financial Planning software. It's the most powerful real estate financial software that I've ever seen. I'm starting to incorporate it into my real estate agent business.

Pat L. · Answer

Candid conversation between a man and his financial planner

Financial Planner: Do you drink beer?Man: Yes

Financial Planner: How many beers a day?Man: Usually about three

Financial Planner: How much do you pay per beer?Man: $5.00 which includes a tip.

Financial Planner: And how long have you been drinking?Man: About 20 years, I suppose

Financial Planner: So a beer costs $5 and you have three beers a day which puts your spending each month at $450. In one year, it would be approximately $5400 correct?Man: Correct

Financial Planner: If in 1 year you spend $5400, not accounting for inflation, the past 20 years puts your spending at $108,000 correct?Man: Correct

Financial Planner: Do you know that if you didn't drink so much beer, that money could have been put in a step-up interest savings account and after accounting for compound interest for the past 20 years, you could have now bought an airplane?

Man: Do you drink beer?Financial Planner: No.Man: Where is your airplane?

Meghan Chomut · Answer

This is EXACTLY why I started my practice. I'm a CFP® that works exclusively with income property owners. When I bought my first rental all the partners at my firm recommended NOT to go ahead with it. They didn't think the numbers made sense and thought it was TOO much risk. But I did it anyways.

But then I felt like I had no one to talk to when things got bumpy (hello ego lol). I was constantly switching from the CFP® hat to the investor hat and was losing focus of the numbers and getting too sucked into the emotion of it. Water in the basement... we should sell. Tenant texts to complain on Christmas... we should sell. 1st of the month... YAY!! I'm so happy.

The rollarcoaster is real. And having a team of experts (and mentors) is so key.

Brian M Sweeney · Answer

@Carl Fischer I consider all of the above. If it is a good investment and meets certain financial criteria I always factor in real estate.

Carl Fischer · Answer

@Scott Scharl

Fee based planner vs commission based will many times tout real estate.

James Orr · Answer

I believe there is a gap in the market of financial advisers that are proficient at advising on real estate as well as stocks, bonds, insurance, cash flow planning, social security, etc. I think you'd do well focusing on that as a niche. Feel free to reach out if you'd like to discuss more.

Paul Allen · Answer

I am a financial advisor, and I incorporate real estate investments into financial plans. I hold the CFP and EA credentials. While the CFP credential is more widely known, EA is more meaningful to real estate planning.

I don't recommend real estate to clients who are not already in it (except REITs). The IRS calls it 'passive income' but most landlords I know are working their tails off. If you didn't walk in my door already interested in owning RE as an investment, I am unlikely to bring it up.

I've recommended note investing to a few clients, but my niche is military, so I don't have too many clients with a financial situation where note investing makes sense. It's right for a few people, though.

There are not too many advisors who incorporate RE investing into planning. Given the response to our offering it, I'd say it's been a grossly under-served market.

Best of Luck Going Forward!

Jay Hinrichs · Answer

there are certainly FP out there that sell alternative products of which real estate is simply one of them

biggest issue is the borker dealers most start with dont allow you to sell away.. IE you can only sell their product.

so finding one of the alternative shops to work with will be your mission i suspect.

Pat L. · Answer

Most of those we have dealt with in the past were always against or didn't comprehend our REI, esp 401(K) solo self directed into REI. So we self managed our tax deductible IRA's, 401(k)'s etc. Finally we had to sit down with a group because of the impending RMD's, impact on social security & our trusts etc. After several meetings they asked us to explain how to hold creative seller financing on a property they inherited from their parents, complete with the issue of probate that they maybe should have 'financially planned' for.

Tim Clary · Answer

My financial planner does not recommend it...I really haven't heard of one that does unless you can but with cash.

Does Your Financial Planner Recommend Real Estate?

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