The financial planning profession evolved initially from insurance product sales. The focus has thus remained on commissioned products, beginning with insurance products. As the scope of professional expertise has expanded and compensation models have evolved, additional investment asset classes and advising services have been added. Real estate investment advising has remained conspicuously underrepresented in the financial planning profession. Real estate sales and marketing remain within the purview of real estate brokers and agents. Notably, real estate agents generally do not function as real estate investment advisers; rather, they generally function as commissioned sales agents, though may choose to offer advising services in addition to sales and marketing.
Real estate investments, on average, offer a similar expected long term internal rate of return and volatility as equity securities, offer diversification benefits to an investment portfolio holding equity and fixed income securities, and in aggregate constitute a significant total market capitalization. Each of these considerations represents a compelling argument in favor of including real estate ownership as a significant component of most investors’ portfolios, including real estate investment advising as a component of sound financial planning, and incorporating real estate investment advising within the scope of a financial planner’s education and expertise.