Every Property Adviser Is Biased. Including Us.

Everyone who gives you property advice gets paid somehow, including us. So, why are we telling you this? Because sunlight is the best disinfectant ... and once you can see the incentives, you can judge the advice. In this episode, Ed and Andrew lay their own incentives bare, then show you how to spot everyone else’s. You’ll learn: Is your property adviser biased? The hidden incentive behind every piece of property advice How to work out whose advice you can actually trustThe takeaway? You don’t need advice with no bias ... that doesn’t exist. You need advice where the bias is out in the open. Let us know your thoughts by leaving us a voice message on the Property Academy Hotline⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ https://www.speakpipe.com/PropertyAcademy For more from Opes Partners: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ https://www.opespartners.co.nz/newsletter-sign-up⁠⁠⁠⁠⁠⁠⁠Stay ahead of the NZ property market⁠⁠⁠⁠⁠⁠⁠ https://www.opespartners.co.nz/private-property-sign-up?utm_source=podcast&utm_medium=promo&utm_campaign=pp_signup⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Instagram⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ https://www.instagram.com/opes_partners/⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠TikTok⁠⁠⁠⁠⁠ https://www.tiktok.com/@opespartners

• 0:08Speaker 00

  Hello and welcome along to the Property Academy Podcast by Opes Partners. I'm your host, Sepp Knight.

• 0:12Speaker 01

  And I'm Andrew Nocco.

• 0:13Speaker 00

  And this is a show that helps Kiwis go from zero to five investment properties. So you can be financially free and stick around for the next 15 minutes because you're going to learn, is your property advisor biased? The hidden incentive behind every piece of property advice? And how to work whose advice you can really trust? Now, it seems to be that every person on the internet or on Instagram or recording a podcast who's talking about property and giving advice gets paid somehow, including us. And that comes with a lot of biases and hidden incentives. And so it's important to talk about, well, what are those incentives so that you can spot them? Now, if we start with us before we talk about everybody else under the sun,

• 0:58Speaker 00

  here at Opes Partners, we offer free wealth plans where people can come in and get those and it doesn't cost them anything. But then we might recommend a new build property from our sister company, Opus Property, and then they get paid a normal real estate fee, which could be, for example, $25,000. And I can tell you this because every single person who's ever been recommended a property from us gets a disclosure statement saying that fee. So it's not some great secret. But the reason I'm telling you this is that means that I've got an incentive to always say that property investing is the way, the truth and the light. And investing in new builds is the only way and the best way to make money.

• 1:42Speaker 00

  And if you invest in any other way, you're an idiot and it's too hard and the returns are low and come and do it with your old mates at Opes Partners. That's the incentive there, right?

• 1:54Speaker 01

  Yeah, but what I've found is if you genuinely tell people the downsides of what you do. So in our case, the downsides of investing in new builds, well, people actually tend to trust you more and you get a better reputation. And even if you tell someone not to invest and that they should do it a different way, they could be a great advocate for your business and or use you in the future. Because let's face it, there are plenty of times, like I just met with a really nice young couple last week and I said, you shouldn't be investing in new builds right now. You're a builder and you're an interior decorator. Buy some properties and build up your equity by doing some renovation projects.

• 2:30Speaker 00

  Well, do you know what's funny? I was just reading, so I don't know why I do this to myself, but I sometimes go on Reddit.

• 2:35Speaker 01

  No, no, you should be banned.

• 2:39Speaker 00

  And read the comments. And actually, this one wasn't on Reddit. It was a discount, it was like a financial advisor website where financial advisors talk to one another, right? And so there was some anonymous commentator is saying, I bet you nobody ever goes into Opes Partners and gets told not to invest in property. And I thought, that's actually not true. So for example, I'll just give you a quick example. There was a listener of the show, this is back when I was talking about like different ways to make money via side hustles, right? And I was talking about UGC creators. So when people create like videos to like talk about using your product, right? And so I had an investor reach out to me and say, oh, actually, yeah, I've come in and talked to you guys. I'll create a social media reel for you, you know? And I was like, yeah, sweet, let's do that. That sounds really cool.

• 3:24Speaker 00

  And I didn't know anything about, about her story. And so she sends it through and it turns out, and I can say that's because she's recorded it for us publicly, but she'd come in and talked to one of our financial advisors, Ben, and they were looking at investing. And he said, but you're about to go and do a couple of rounds of IVF. You're going to have a baby soon. You're going to go down to one income. It's probably not a good time for you to invest in property because you're going to have all of these expenses and you're going to have, you know, buying a car seat and all of these things. And then you're going to have.

• 3:57Speaker 01

  I love the non-parent coming up with the big, the major cost of a child is a car seat.

• 4:03Speaker 00

  Anyway, anyway, ultimately they decided not to invest at that time. And the wonderful news is she's now pregnant and they are expecting. And she's like, oh, that was actually the right decision. Now, my, my whole point behind that is while I do want to expose the incentives that lots of people have in the property industry, so that you can just understand why people say the things that they do. At the same time, it's not true that everybody follows exactly what their financial incentive is, right? Like if you think about a carpet salesperson, they don't automatically say, I need to sell these people the most expensive carpet possible, right? Like the best people that you end up trusting, the best carpet salespeople will be saying, well, what do you actually need?

• 4:48Speaker 00

  Maybe you've got young kids, so maybe you don't want to put in the most expensive carpet right now. You might want to put in something that's hard wearing and good enough. And then once they fly the nest or they're a bit older, that's when you invest in the better stuff.

• 5:01Speaker 01

  And if you think about like, on those financial advice forums, because I've seen similar things like that from mortgage brokers. And like, I get it. I get why people have that feeling sometimes. But if I think about a mortgage broker and how they're paid, that's pretty similar in the sense that they don't charge a fee directly to a client a lot of the time. They get paid from the bank. So if the mortgage advisor gets a half million dollar mortgage, they might get, you know, three and a half thousand dollars worth of commission from the bank for arranging that loan. But if they get a million dollar mortgage for that person, wow, I've just doubled my commission and it took just as much time potentially. But it's not like mortgage brokers who have got that incentive, all of a sudden we'd be begging them saying, wow, I bet you they always try and get you the most money from the bank so that they get paid the most.

• 5:46Speaker 01

  There could be a small number of people that operate that way, but no one that anyone's going to actually trust.

• 5:52Speaker 00

  Well, even if you look at the incentive there, right? Because mortgage advisors get paid every time they originate a mortgage. That's when most of the commission comes, right? Now, when we talk about originating, that means that a mortgage advisor has an incentive to switch you between banks every three or so years, right? Because if they switched you every single year, the bank has it, has an agreement with them that they can take some of that mortgage commission back, right? But that agreement is usually two or three years or so. So every three years, there is an incentive for a mortgage advisor to switch you between banks, even if that might not be the right thing for you. Now, there is regulation around this, right?

• 6:37Speaker 00

  Like a financial advisor can't just do something that's only in their best interests. If there's a benefit for you, for instance, if there's a cash back, if you switch banks or if another bank has a longer interest only period, that might suit you. There can be a win for both of them. But my point that I'm trying to say here is there's that incentive as well, right? And there could be a benefit for you, but you're just watching out for, that's the incentive. Now that you know about it, you can look out for any dodgy behaviour.

• 7:06Speaker 01

  And it's really interesting because if you think about people that charge by the hour, they also have a financial incentive to kind of act, maybe not in your best interests. And it doesn't mean that they're going to do that. So take for example, lawyers, right? If I think about a lawyer that's charging by the hour, it would be in their best interest not to settle this disagreement quickly, but to battle it out, get every last dollar because you have been aggrieved and you should just carry on fighting this to get every last dollar. They're going to benefit from that. Even if you don't get any more money, they're going to charge more fees, have more meetings, do more work for you. Now, I've worked with lots of lawyers and the ones that I work with and continue to

• 7:49Speaker 01

  work with, they charge what they need to charge to get the job done. I trust that they always tell me whether or not it's appropriate to keep fighting a fight or whether or not you just actually just chalk this one up to a win. The good lawyers say, you don't need to do that yet. Like the juice isn't worth the squeeze, let's just move on.

• 8:06Speaker 00

  Well, that makes me think about even like builders, right? Builders earn an hourly rate most of the time. They're charging for their time. That's okay. That's how they get paid. That does mean that there is an incentive for things to take longer or to slow things down so that you can charge more hours or potentially to recommend different building products that have higher margin, right? So if I think about a plumber, there could be different types of pipes or there could be different, oh God, I don't know anything about plumbing, do I? That's why my brother's a plumber, not me. But there are different types of, of equipment that they might charge and some of them will have higher margins. They'll make more money on some products than others.

• 8:47Speaker 00

  That does mean there is a financial incentive to sell you more of the things that have higher margin and not some of the other things that have a lower margin, even though that may be a better product. Again, I'm not saying that builders and plumbers are doing these things. I'm saying that is the incentive there, right? And I'm a great believer that New Zealanders have really good BS detectors and that once you know what to look out for, like the carpet salesman, are they just trying to sell me the most expensive one? You can be attuned to that and you can typically sense this, right? And I'm not having a go at any of these people, right? Because everyone's got to get paid somehow. And if I take the mortgage advisor example, I think it is a real benefit to New Zealanders

• 9:30Speaker 00

  that you don't often pay them directly. The bank pays them instead and which means you get financial advice and it feels like it's free because you haven't paid for it. But there are other incentives too, like the bank's mortgage manager. If you were to go to somebody directly who worked for a bank, like a mobile mortgage manager, they've got an incentive to say, well, go with my bank because they can only sell you a mortgage or get you a mortgage from the bank they work for. If you go to a Westpac mobile mortgage manager, they're not able to arrange. A mortgage for you from BNZ or ANZ, right? So they've got no incentive to send you across the road and say, no, don't actually come to Westpac, go get your mortgage from BNZ because they've got their own targets to hit, right?

• 10:13Speaker 00

  And actually, it reminds me of BNZ's ads at the moment. Have you seen some of these? I saw one yesterday that said, work directly with the decision maker. So now we're seeing quite a lot of ads from BNZ saying, effectively saying, even though they've said, oh, no, we love mortgage advisers. Well then, why are they running ads that are basically come work with us? Don't go and use a mortgage adviser is the subtext of the ad. That's not what the text is, but I think that's what they really mean with a little bit of winking and nudging.

• 10:42Speaker 01

  Course it is. And then the irony is you go to the decision maker who then just have to send it to the same credit unit to sign off as a broker would. And I think with property, one thing that I see quite a lot, and I just, I just don't like it because I think everyone should be encouraged to make a sound financial decision based on what their situation is without begging someone else. Like I saw this guy on Instagram recently and he's a buyer's agent. So essentially you find properties, usually older properties that people could renovate and he's appealing to investors. And that is a completely legitimate way to make money out of property. And we support it. We support people that do it.

• 11:23Speaker 01

  We don't offer it, it's not our thing, but we support any way that someone wants to get ahead financially. But in this post, he said, now if I was trying to scam you, I'd sell you a townhouse in Christchurch. And I just thought, really? That's kind of your angle to make it seem like you're not sleazy, but that just feels a little bit sleazy. Like that just got my bullshit radar going. And what I was thinking is there's so many good reasons someone might invest a particular way, be it renovations or a townhouse in Christchurch. Someone's got a limited budget, that's going to get someone comfortable and they want to buy in somewhere where, you know, there is good tenant pool and stuff like that. Don't go begging someone for making that decision. You don't know their financial situation.

• 12:05Speaker 00

  Well, what this is really talking about, right? Cause we're here talking about incentives. There is a bias between strategies, right? There is an incentive for somebody who promotes renovations to say, no, don't go and invest in a more passive way. You've got to do a renovation. No, don't go and buy any old existing house and just rent it out. Do a renovation. That's the proper way to invest or don't go invest in newer properties either. Do a renovation instead. There is an incentive for anybody who helps people invest with newer properties to then say, don't go do a renovation, do a new property instead and only highlight the benefits and not highlight any of the costs, right? So that's just the incentives and they are following their incentive, right?

• 12:50Speaker 00

  That's kind of when I look at it, right? So I don't necessarily take the view that, that something is particularly sleazy or not. I just say, well, that is the incentive. And so of course that's what they are doing, right? And that is one of the reasons though, that when I think about my YouTube channel, right? Where I recently did a video that got 40,000 views talking about the pros and cons of newer or older properties and which ones make more money. Actually, I think we did a podcast on that as well. Now, what I find is that if we say, hey, look, I own a company that helps people invest in new properties. I personally invest in, in new properties. That means I'm biased. So as you're watching this video, take that into account. And if I can show both sides, I know that I'll get 40,000 people tuning in.

• 13:33Speaker 00

  But if I only showed one side and came across as really biased, that's only going to go out to like 500 people, right? And I find that much more useful to try and show both sides because otherwise it can just seem like two biased people yelling at each other. Oh, renovations are the way, truth of the light. No, new builds are the way, the truth and the light.

• 13:54Speaker 01

  And actually that kind of makes me think, well, given that it's so easy to jump online and talk about anything nowadays, you don't have to prove how you're paid and you don't have to prove you're biased. I thought it'd be quite useful for people to have an idea of things you could look for to figure out, well, can I trust this person or not? What should I look for? So three things. Number one, did they tell you how they get paid? And, and probably I'd say before you even asked for it, because you know, it's one thing if someone tells you something once you ask them to tell you that, but if people are very upfront about how they make their money and, and how that can create bias, I think that's a really good starting point.

• 14:32Speaker 00

  Do you know what I hate as well? I hate it when somebody's like promoting whatever, however they're going to help you invest in property and then you go to their website and it doesn't have the price on it, or it's not really clear about how you're going to pay them. And then you've got to book a meeting to find out how they're paid and how much it's going to cost. It drives me up the wall because otherwise how are you supposed to make a decision, right? Like, I don't want to sit down with 10 different people to find out, you know, what they get paid like, I mean, I just kind of think if you're not putting it out there, what are you hiding?

• 15:05Speaker 01

  A hundred, yeah, there we go. Personal janks. Number two is can they still make money if you say no? And if I just use this for us, for example, at Opes Partners, we will put together a plan for anyone. And look, absolutely, we'd love them to use our property service if they want to invest in new build properties, but they don't have to. But I also love them to use Opus mortgages. I'd love them to get some mortgage advice for, for their existing portfolio or their renovation project or whatever the hell they want to do. Or I'd love them to use property management and have us look after their properties for them or, or Opus accounting and, and use our accounting service. Because by using any of these services and, and creating some revenue for the group, well, that gives us the freedom for Ed and I to be able to take times and record a podcast

• 15:50Speaker 01

  and provide information to everyone.

• 15:52Speaker 00

  And I think what you're saying, right, is that actually one of the reasons we started these different companies is because we know that investing in new properties isn't right for everyone, but we still want to find other ways we can help you. And so if we're like, oh, well, you're not into new properties, all good. Maybe you'll use some of these other things if we're open and honest and, and treat you right. Having said that, that can create its own bias, right? Because some people like having all of their advice in one place and they might use the same company to help them out with lots of things. But other people worry that, well, if I use a mortgage adviser who works for the same group of companies as the property manager, maybe they're just going to say that each

• 16:35Speaker 00

  other's doing a great job and try and pull the wool over your eyes. So you can see how things can be read both ways, right? Some people are like, oh God, make it easy for me. Other people like to work with people from lots of different companies because they think, well, maybe that means that it's all a little more independent. But you also said that you've got a third test as well, right?

• 16:56Speaker 01

  Yeah. And this one can be a little bit harder, but I think that it's really good to see evidence that they don't just go along with their biases. So if they have on their website, things like who they're not the right fit for, or who shouldn't pay a fee to use their services, things like that. Because, you know, most companies would be willing to work with anyone. But let's face it, they're not going to necessarily suit everyone. And so you, they, you just want people to be upfront about those things.

• 17:25Speaker 00

  And when you're looking on their websites, I always think it shouldn't just say something dumb like, we don't work with people who aren't willing to do the work. I mean, like actual examples of when it would be reasonable or who should not work with you. I think that's like just the way to come across upfront and honest. But ultimately New Zealanders have really strong BS detectors. And so once you know about the different biases that are out there, you can kind of spot them.

• 17:51Speaker 01

  I think a really good example is people like Danny, who's come on the show before, used to work for Opus Accelerate. The program she signed up to were more than happy to take her $25,000 without actually any abilities for her to invest in that. Actually, that's not the right thing to do.

• 18:07Speaker 00

  Over the last 15 minutes, you've learned is your property advisor biased? The hidden incentive behind every piece of property advice and how to work out whose advice you can actually trust. Right, let's wrap it up there, but please don't forget to rate, review and subscribe to the podcast. Really does help us get the message out to more people.

• 18:28Speaker 00

  Thanks for listening to the Property Academy Podcast. I'm your host, Tim McNeill.

• 18:31Speaker 01

  And I'm the Dracal.

• 18:32Speaker 00

  We're going to be back here tomorrow with even more daily strategies, tactics, insights to help you get the most out of the New Zealand property market. Until next time.