Qualities That The Right DST Advisor Must Have

Although Delaware Statutory Trust (DST) is getting trendy and relatively straightforward to be comprehended, it requires an extra amount of professional skills and knowledge to choose the suitable one that can fit the goal of your business. In particular, if the investor wants to have his or her DST investment covered under 1031 Exchange, a great DST Advisor is highly recommended. For investors, various criteria have to be satisfied in order to benefit from deferring the payment of the capital gains tax. Numerous deadlines and limited time windows are critical to be met for the qualification of the like-kind exchange demanded by 1031 Exchange. Therefore, a DST Advisor is absolutely needed. But what are the guidelines to find a great one?

No One Size for All

Nowadays, DST advertisements can be easily found all over the internet. However, there will be only a handful that can really match your cup of tea. Each DST investment comes with its own level of risk. Depending on an investor’s own financial situation, it demands lengthy analysis and thorough consideration to conclude the right one. When we say the right one, we mean a DST that is more than just the most high-end and profitable. The underlying risks and returns associated with a DST investment must be put into the context of the investor’s overall investment portfolio. With that being said, a great advisor must have in-depth knowledge and understanding of the investor’s individual financial position. Due to the notorious “Seven Deadly Sins” of DST, some DST investment might appear high return yet fluctuate much by the market condition. For an investor with a weak financial capacity, such rocky external market variation could significantly strain the investor’s overall financial stability. For a DST advisor who knows both the market and the investor inside out, such instability could be minimized at ease.

Avoid Conflicts of Interest

Your DST advisor should stand up for your financial interest 100 per cent. In other words, it would violate his or her professional code of conduct and ethics if your advisor simultaneously possesses any kind of interest associated with the DST you are investing in. This might sound like a no brainer, but it really requires an advisor’s constant attention to prevent putting himself or herself into such a position when providing any advice. It is a self-discipline that an advisor needs to maintain at all time. A great advisor would voluntarily conduct a conflict of interest check whenever he or she considers accepting a new client.

Objectivity

Any investor should watch out for an advisor who promises you a success or undoubted high return. It might be irresistible for an advisor to provide promissory statements to his or her potential clients. However, due to the nature of the uncertainty of the investment industry, such practice would be self-destructive. It can erode the integrity and public confidence in the profession of the DST Advisor. A great DST advisor ought to provide investment suggestion solely based on solid evidence and track records, even the advice might lead to a negative outcome. The ups and downs of the investment market are heavily based on the confidence of investors. DST advisors are the frontline to offer their professional yet objective insights in accordance with the actual situation of the market. Any puffed-up statements could not only harm investors’ financial interests but also manipulate and mislead the operation of the market at large. In fact, Rule 2210(d)(1)(B) of the Financial Industry Regulatory Authority provides that “No member may publish, circulate or distribute any communication that the member knows or has reason to know contains any untrue statement of a material fact or is otherwise false or misleading.” It is a matter that any great DST advisors should take very seriously.

DST Evaluation

A great DST Advisor must understand the life cycle of a DST. He or she possesses profound knowledge of the procedure and process that how a DST is evaluated and assessed by various sources. It includes the DST trustee, broker dealer, and loan issuers. In fact, each of the involved parties aforementioned should conduct rigorous due diligence independently upon the property invested under the DST. Thus, a great DST advisor understands where to retrieve those due diligence reports and has the sufficient and necessary skills to interpret the reports. As a result, an investor could be guided by his or her DST Advisor based on the information gathered from the reports.

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