Bank Investment Consultant asked Thomas A. Zgliniec, from LPL, a series of questions about real estate investing and how advisers should approach this asset class. With only a few minor edits for clarity, here are his responses.
For HNW clients who are seeking diversification, is real estate a necessary investment? Or can they easily find diversification in other ways? While investing in real estate can provide diversification to traditional equity and fixed-income portfolios for HNW clients, the determination of its use in a portfolio includes more than just the benefit of a single quality, such as diversification. Often times, other financial qualities are of greater appeal. These qualities include the generation of tax-sheltered income, ability to execute 1031 exchanges, and control of the use of leverage. While diversification certainly is necessary in most portfolios, nobody can responsibly say that real estate is necessary.
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