IFA Research
Advising Clients On Overseas Purchasing
Wave 35 - November 2006
Introduction
- This month's Morley questions focused on IFAs advising clients on Overseas Investments
- Questions were placed on November's IFA Census and fieldwork was conducted during 8th to 24th November 2006.
- 366 IFAs responded to the survey
Clients invested in overseas property - Last 3 years
1 in 5 respondents do not have any clients who have invested in overseas property in the last 3 years. The most frequent number of clients per IFA who have done so is between 1 and 5.
Base: November 2006 - All Respondents (366)
Q1 - How many of your clients have invested in overseas property in the last 3 years?
Clients invested in overseas property - Classification - Age
When looking at the age of the IFA older respondents have fewer clients who have invested in overseas property.
Base: November 2006 - All Respondents (366)
Q1 - How many of your clients have invested in overseas property in the last 3 years? Vs. Which age band do you fall into?
Clients invested in overseas property - Classification - regulated status
Respondents who are directly regulated are marginally more likely to have more than 5 clients who have invested in overseas property.
Base: November 2006 - All Respondents (366)
Q1 - How many of your clients have invested in overseas property in the last 3 years? Vs. What is your regulated status?
Clients invested in overseas property - Classification - Size of firm
More respondents who are in small firms with only 1 or 2 individuals have fewer numbers of clients who invest in overseas property. Firms with more than 10 individuals, have around a fifth have at least 5 clients investing overseas.
Base: November 2006 - All Respondents (366)
Q1 - How many of your clients have invested in overseas property in the last 3 years? Vs. How many registered individuals work for your business in total across all sites?
Advising clients to purchase overseas property
Only 1 tenth of respondents currently advise their clients on purchasing property overseas as part of their investment portfolio.
Base: November 2006 - All Respondents (366)
Q2 - Do you currently advise your clients to purchase overseas property as part of their investment portfolio?
Advising clients to purchase overseas property Classification - Age
Younger respondents (up to age 35) are more than twice as likely to be advising clients in relation to overseas property than all other groups.
Base: November 2006 - All Respondents (366)
Q2 - Do you currently advise your clients to purchase overseas property as part of their investment portfolio? Vs. Which age band do you fall into?
Advising clients to purchase overseas property - Next 3 years
A quarter of the respondents who do not currently advise their clients to invest in overseas property expect to begin advising their clients to do so within the next 3 years.
Base: November 2006 - Respondents who do not current advise their clients to purchase overseas property (328)
Q3 - Do you expect to advise your clients to invest in any overseas property over the next 3 years?
Advising clients to purchase overseas property - Commission basis
Less than a third of respondents who are currently or will be advising clients to invest in overseas property will do so on a commission basis, paid by the agent or developer of the property.
Base: November 2006 - Respondents who currently advise clients to invest in overseas property, or expect to do so in the next 3 years (123)
Q4 - If you were advising clients to buy specific overseas properties, would this be on a commission basis, paid to you by the agent or developer?
Level of commission from agent or developer
Two-thirds of respondents believe that a commission rate of between 1% - 3% would be fair if acting on this basis. Far fewer respondents use the higher 5%.
Base: November 2006 - Respondents who do or will advise clients to purchase overseas property, and who don’t know or will do so on a commission basis (81)
Q5 - If on a commission basis, what is the level you would consider fair for a simple introduction (the developer arranges inspection etc) on a €100K property?
When advising a client to purchase overseas - Importance of following factors
The most important factor is considered to be the return on the investment itself; however this is marginal as overall (important / very important) all 3 factors receive similar scores.
Base: November 2006 - Respondents who currently advise clients to invest in overseas property, or expect to do so in the next 3 years (123)
Q6_Group - How important would you consider each of the following factors when advising a client to purchase overseas property as an investment?
Return on investment - Classification - Age
Those aged up to 35 find the return on investment marginally less important than the other age bands, however, return on investment is considered important across all groups.
Base: November 2006 - Respondents who currently advise clients to invest in overseas property, or expect to do so in the next 3 years (123)
Q6_Group - How important would you consider each of the following factors when advising a client to purchase overseas property as an investment? Vs. Which age band do you fall into?
Property location - Classification - Age
Similar to the previous statement, the age band up to 35 find the location of the property less important that what the other age bands.
Base: November 2006 - Respondents who currently advise clients to invest in overseas property, or expect to do so in the next 3 years (123)
Q6_Group - How important would you consider each of the following factors when advising a client to purchase overseas property as an investment? Vs. Which age band do you fall into?
Rental income - Classification - Age
A substantially higher proportion of respondents aged between 35 to 55 find rental income very important compared to the younger and older respondents.
Base: November 2006 - Respondents who currently advise clients to invest in overseas property, or expect to do so in the next 3 years (123)
Q6_Group - How important would you consider each of the following factors when advising a client to purchase overseas property as an investment? Vs. Which age band do you fall into?