How one real estate investment vehicle can bring the next generation to your practice
“I think millennials are better equipped than other generations to access and understand the wealth of information they have at their disposal so that they can become more aware of alternative investment products,” said Clas. “And in the universe of such ‘alternatives’, MICs are some of the easiest to understand while providing investors with a regular source of income,” said Clas.
They are a great way for investors with smaller investment accounts to diversify from the public markets, ”said Clas, noting that an initial investment of $ 5,000 with CMI can provide exposure to a professionally managed real estate fund.
If MICs are non-transferable for a tougher real estate investment like a home, setting up a customer child with a MIC investment can serve as an entry point into the larger generation change. If you show them how the investment grows and brings returns, Clas experience shows that such generational changes can take place gradually, with the advisor playing an intermediary role that is of central importance to the process.
“MICs are a good training ground for a young investor,” said Clas. Investment vehicles that pay income can be a great way to get their feet wet for new investors, and a mortgage-backed collateral-backed asset is easy to understand for investors of all skill levels.
Clas said when advisors are talking to clients about a new investment vehicle, it’s important to put the conversation into what they already understand. Canadians understand real estate. Even young investors will know how well real estate has done and how it can serve as a hedge against inflation.
Presented as such, MICs can provide your clients’ children with access to a market they can easily understand and allow them to have a long, meaningful relationship that extends beyond and beyond wealth transfers.
“An MIC is an investment vehicle that allows a 21-year-old to access property-backed assets, which means they are directly exposed to the real estate market without directly owning property,” said Clas. “Buying real estate directly can be stressful and capital-intensive. When I’m 21 and don’t have a few million dollars, I can’t access a real estate investment. A MIC would be an option for such an investor to gain real estate exposure on their first investments. “