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Does A Land Investor Working With A Property Fund Manager Require An Ifa?
Regardless of the type of investment you consider, your relative wealth or your age, it quite likely makes sense to get the objective advice of an IFA.
Decisions on investing are among some of the most important and stressful processes a person can undertake. This is why most people are advised to enlist an independent financial advisor (IFA) to provide objective, third-party advice on how to manage a wealth-building plan.
The overall goal of the IFA-investor collaboration is about well-timed asset growth. Every individual and family has different needs and different timing, affected by the age of the investor and when he, she or their family needs liquidity. This matter of timing can significantly shift the nature of the investment.
For example, most people in the UK are aware of the strong returns on land and real estate - particularly in light of the housing shortage. The investor’s choices include buying a home to rent out (and realise gains ten or more years into the future), investing via a land fund manager ...
... (where raw land is turned into housing, generally in under five years), or buying market-traded shares in a real estate investment trust (REIT), where valuations change by the minute. REITs are subject to overall market dynamics and the investment is completely liquid.
An experienced investor may invest in any or all of these three real estate categories. And very experienced investors may understand what they are doing enough that they do not need an experienced, third-party advisor. But what an IFA brings most investors is significant in a variety of investment scenarios:
If you are just beginning to invest - The Citizens Advice Bureau, a not-for-profit based in London, urges investors to seek third-party counsel to answer several questions: How much risk are you willing to bear? How long do you want your money tied up? Do you want general advice or guidance regarding a specific investment?
If you have a recent windfall - An inheritance, bonus pay, the sale of property or a business: any of these needs to be managed carefully due to tax implications and the temptation to "put all the eggs in one basket," so to speak. An IFA can temper the emotions and exuberance of such moments to guide the investor to holistically put their money to best purposes and outcomes.
If you are entering a new life phase - There are many junctures at which one’s financial responsibilities change: getting married, having children, when experiencing career advancement, when starting a business, when selling a business, retirement, divorce, death of spouse, and old age, among others. At each point, investment strategies can change. A qualified independent financial advisor will guide the individual and dependents to identify the smartest ways to plan for and navigate through those changes.
This is not to denigrate the stewards of specific investment products. They certainly have their own reputations and asset growth successes that drive their work. The land fund manager who succeeds at turning a £10,000 investment into a £14,000 return in two years will certainly share those results with prospective investors. But every land investment is different, and the individual needs to decide if the semi-liquidity of real estate development fits the investor's own life phase timeframe.
As the Citizens Advice Bureau advises, you may pay a fee, a commission, or a fee plus commission for an IFA's services. This is wholly warranted, as your investments have a great deal to do with your future happiness and wellbeing.
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