Independent financial advisors usually blanche at the idea of helping clients get into real estate.
REITs are OK – if you look at them just so, they could be a perfectly normal form of security, with all the usual risk patterns and none of the sleep-robbing quirks of construction, landed property and high-rises. It’s a shame, really, as many customers are keen. Fortunately, a new technological solution may soon be at hand to help advisors get squarely into the game.
The Tax Cut and Jobs Act contains provisions that helped spur innovation in real estate investment. One example involves RealCrowd, a crowdfunded real estate site. The company has developed a new digital tool called REAllocate. This brings in vetted investors and matches them with real estate opportunities. Both sides of the deal are carefully scrutinized for risk factors. A special version of the app, called REAllocate Pro, has been designed for use by independent financial advisors.
The program is still in the testing mode, but may be a promising development for advisors. First, they would have yet another investment tool to offer to clients. Importantly, fees – often a considerable problem for advisors when real estate deals are involved – can be charged within the usual assets under management framework. This should remove a major obstacle and make real estate more palatable to independent advisories.
Some investment professionals remain skeptical, though. The problem the see doesn’t relate to fee structure or technological progress. Rather, they simply have a hard time finding real estate deals that make financial sense and return a good profit to clients. If the market isn’t good, no amount of tech wizardry can change it, it seems.
For more information, please read:
Risk Meets Real Estate in New Advisor Pilot | Wealth Management