Wednesday, June 19, 2024

How To Choose a Financial Planner Who Gets Real Estate Investing

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As a real estate investor, choosing a financial planner can be a daunting task. More often than not, you’ll be met with confused, deer-in-headlights stares if you try to bring up your real estate investments in a meeting with a financial advisor.

The problem with consulting a financial planner about your real estate investment plans is that most of them don’t know anything about real estate. It’s kind of like asking a dentist to perform brain surgery. The fact that dentists and surgeons are both medical professionals doesn’t mean they have the same knowledge or skills.

If you can find a financial planner who actually gets what you’re trying to do with your real estate strategy, they can be a substantial advantage to you. However, you’re better off managing your real estate investments yourself than relying on a run-of-the-mill financial advisor.

Why Most Financial Planners Don’t Get It

My experience with financial planners is that the vast majority avoid real estate investments. At first, you might find this confusing, since you know real estate can be a fantastic investment. But if you dig a little deeper into the world of financial planning, it will start to make perfect sense.

There are two notable reasons that advisors tend to discourage real estate investments:

  • Compensation models (they don’t get paid for your real estate investments)
  • Lack of knowledge (they don’t know diddly about real estate)

Let’s talk about how each of these factors contributes to your standard financial planner’s allergy to real estate.

Compensation Models

Unfortunately, a substantial majority of financial planners are just repackaged stockbrokers or salesmen in disguise—same job descriptions, different titles.

Most financial planners are paid in one of two ways:

  • Earning commissions from the sale of certain financial products, such as mutual funds.
  • Receiving a percentage of the total market value of the investments they manage. This is called the Assets Under Management (AUM) model.

In other words, they don’t make money when you invest in real estate; they only make money when you invest in the securities they try to sell you. Are you starting to see why so many financial planners dislike real estate?

Lack Of Knowledge

Unless a financial advisor goes out of their way to educate themselves about real estate investing, they most likely won’t know anything about it. It’s definitely not covered in the standard business or finance degree curriculums.

They may have learned a bit about Real Estate Investment Trusts (REITs), but these holdings are closer to investing in the stock market than hard real estate. Most financial advisors have minimal experience with real estate investments, so their understanding is usually limited at best.

Related: The Investor’s Complete Guide to Finding & Hiring a Perfect CPA Match

What To Look for in a Financial Planner

If you’re struggling with choosing a financial planner, you’re not alone. Since people don’t need any credentials to call themselves “financial planners,” it makes sense you would be confused about your options.

Salesmen often market themselves as financial planners. It can be challenging to separate the advisors who can genuinely help you from those who want to sell you on “investments” that actually make more money for them than for you.

In a perfect world, you could find a financial planner who understands the value of real estate and invests in it themselves. But if 2020 has taught us anything, it’s that we definitely don’t live in a perfect world. Advisors who are savvy at the real estate game are hard to find.

If you manage to track down someone who checks all your boxes, congrats! You’ve won the financial planning lottery! But even if you don’t find a financial planner who is also a real estate investment guru, there are plenty of supportive advisors out there that view real estate as an asset that can and should be included in a financial plan.

In general, you should work with a financial planner who meets three criteria.


If your financial planner works on a flat-rate fee instead of commission, they have no motivation to steer you into investments that don’t interest you. They won’t try to sell products; they will just provide financial advice.


Fiduciaries have a legal duty to put your interests ahead of their own. This means that they must recommend investments in your best interest, instead of investments that will earn them the highest commission.


Independent advisors aren’t tied to any particular fund or investment products, and they don’t work for an insurance company. This gives them flexibility in the investment options they can offer.

Related: Building a One Page Financial Statement to Change Your Financial Future

Finding the Right Financial Planner

Working with an advisor who puts your best interest first and sees the value in real estate investing is vital to their ability to actually advise you. You should take your time investigating your options until you connect with someone you really trust. If you can’t find anyone who meets your needs, you can always manage your real estate ventures yourself and let a financial planner handle your more “traditional” investments.

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Do you have a financial planner? How did you find them?

Tell us how your financial planner has (or hasn’t) helped you in the comments.

Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.

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