Whatever your darkest thoughts are about real-estate agents, they couldn’t be further from the truth. The real situation is far worse.
Entry-level standards to financial planning are low (or rather, they are, but only until the new education standards start to kick in from 2019 for new entrants), but at least the standard is rising. The entry-level requirement for real-estate agents is far, far lower.
In fact, if you dug a deep hole and dropped the bar to the bottom, it would still be higher than the entry requirements to this industry.
The experience of dealing with real-estate agents is like going down a rabbit hole to a place where nothing is as it seems. There are multiple explanations for everything that happens (and does not happen), and those explanations change from day to day; disclosure is an interesting theory (especially the “disclosure by inference” approach the industry employs); and the concept of client-first is utterly alien.
When you’re a tenant, you’re not the agent’s client, and acting in the tenant’s best interest isn’t a requirement of the agents’ principles of conduct. The principles state that the agent must “act ethically, fairly and honestly when dealing with all parties”, but personal experience suggests that’s not a consistent mode of behaviour. Nevertheless, one might have thought treating people in accordance with the law would be a requirement, but no, even that seems optional.
The low entry standards are a big part of the problem; becoming an agent is too easy. It can take as little as a week to get a certificate of registration; they’re advertised online for as little as $349. The Real Estate Institute of NSW charges $625 for its online course.
Getting a real-estate licence takes a little more dedication to the cause. Getting a Certificate IV in Property Services (Real Estate) could cost you a few thousand bucks, and it might take you as long as a year or 18 months – but as one website puts it, “You may complete the course any time” before that time has elapsed.
“Clients will be able to see that you’re qualified, knowledgeable and committed to your profession,” the website exclaims – a statement that will make the average financial planner weep. Profession? Please.
It’s fascinating to look at the language being used within the industry. For example, a news report from mid-2016 suggests higher education standards for real-estate agents are critical, because a few bad apples are making life more difficult for “many good real-estate agents”. The same article noted that in a single month, six branches of one operation were closed because the owners reportedly spent home deposits they were meant to hold in trust.
In the same way that the worth of a society is measured in how it treats its least fortunate, the worth of an industry is measured by the behaviour of its least ethical. It’s not good enough – as the financial planning industry knows only too well – to dismiss systemic or endemic issues by pointing the finger at a minority and asking the public to trust the others.
The easier it is to get in, the more “bad apples” there are; and the harder it is to identify them and get them out, the less worthy the industry in question. About the best thing that might be said about the real-estate industry is that it makes financial planning look good.
Up-close and personal interactions with real-estate agents throw into stark relief just how far financial planning has come, how far it is yet to go and just how much daylight it is placing between itself and other, lesser industries.
Financial planning is being lifted from the quagmire of conflicts, low entry-level education standards, low ongoing education requirements, and optional codes of ethics. It is instituting formal professional development requirements and a fully supervised professional year for new entrants.
There has been an immense amount of pain and dislocation as a result of the changes that have already been enacted, and there will be more, as further changes are refined and come into effect. The impact on the industry and some of its practitioners should not be underestimated and should not be dismissed lightly.
But the alternative – that is to say, no change – is that financial planning would have nothing much to distinguish itself from occupations such as real estate.
That’s not to say there are not good men and women working as real-estate agents, because there are. It’s just that the industry’s claims to professionalism are as ridiculous today as financial planning’s were 10 years ago.
The fundamental difference is that people involved in financial planning have, by and large, recognised the need to raise standards and to aspire to a higher level of ethical and professional conduct.
Sometimes it’s not until you’ve been on a journey for a while and you’re tired and ready to pack it in that you look back and realise how far you’ve come, and how close the destination really is.