The Sydney Morning Herald reports this morning that real estate franchise operator Ray White intends to move into the financial planning space.
The SMH says:
“Ray White revealed on Tuesday it was setting up a financial planning arm to expand its existing mortgage business, despite the scandals plaguing the industry. It plans to hire sales people to provide general portfolio advice to mum-and-dad investors.”
In the wake of recent financial planning scandals and the growth of property as an investment vehicle for self-managed superannuation funds, this looks like a sensible business decision but also a potentially contentious one with Greens Senator Peter Whish-Wilson saying:
We should all be wary if the Ray White financial advisers are incentivised to promote investment in property, simply to deliver revenue streams to other parts of their business.
Likewise, the SMH reports that consumer advocacy group Choice sounded a warning about potential risks to this business extension. A spokesman said that: “Getting financial advice from a company like Ray White sets up a risk that you’ll be told that a particular kind of investment, like buying a house, is your best option when it may not be.”
Of course, it is reasonable to expect that Ray White will have appropriately trained and compliant financial planners before it embarks on this business strategy. So while the concerns are likely to remain, the ASIC licensing regime will cover Ray White planners in the same way it covers all planners.
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