Advisors discussing investments


Grant Alexander Wilson, Jason Jogia, Gabriel Millard, etc.

Historically, real estate investments have played a vital role in wealth creation and preservation. Adding real estate to a portfolio can enhance returns, minimize overall risk through diversification, and provide a hedge against inflation. Before the 1990s, many people faced barriers to entry in real estate investing, including large capital requirements, specialized industry knowledge, and concentrated risk associated with a limited number of assets. The securitization of real estate investments via real estate investment trusts (REITs) revolutionized the industry, enabling greater participation from both individuals and institutions. Over the last three decades, REITs have grown in popularity as more people have become aware of their benefits.

How do financial advisors view, invest, and advise on REITs?

Despite the evolution of products and the increased participation in REIT investments, little is known about how financial advisors perceive, personally invest in, and advise clients about REITs. As a private real estate owner and operator of multi-family and commercial properties, self-storage facilities, and agricultural land in Canada and the United States, Avenue Living was interested in analyzing these unknowns. We completed a global examination of financial advisors’ perceptions, client recommendations, and personal investment choices concerning public and private REITs as well as direct ownership of real estate. Our study, which received responses from 518 financial advisors across North America, Western Europe, South Africa, and Oceania, was conducted in early 2023.

The perceived returns and risks of the various real estate investments

Our results showed that financial advisors believed private REITs offered higher returns compared to public REITs and direct real estate ownership. They also believed that direct real estate ownership yielded better returns than public REITs. This was consistent with previous research that has shown private REITs offer consistently high risk-adjusted returns (Boudry et al., 2020) and possess portfolio diversification benefits, making them appealing to many investors (DiBartolomeo et al.,2021). Financial advisors ranked public and private REITs as less risky than direct real estate ownership. These rankings were based on financial advisors’ perceptions of overall investment risk. In addition, our results indicated that financial advisors viewed private REITs as having the most favorable balance of returns and risks.

“Our results showed that financial advisors believed private REITs offered higher returns compared to public and direct real estate ownership.”

Do advisors’ perceptions about returns affect how they invest — and what they recommend?

Financial advisors make investment decisions as an individual and on behalf of their clients as agents. The results of our study demonstrated a positive correlation between financial advisors’ perception of returns and their personal investment choices. If a financial advisor perceived private REITs, public REITs, or direct real estate ownership as beneficial, they were more likely to personally invest in these products. Our study shows that financial advisors seemed more inclined to recommend private REITs to their clients, followed by public REITs, due to the perceived favorable return and risk profiles of these investments.

Advisors’ recommendations to clients can impact financial institution performance

The study also analyzed how investment recommendations translated into financial institution performance. We assessed financial institutions’ performance by asking advisors how well their firm performed relative to their main competitors. Controlling for the age and size of the firm, we examined the effect of advisor recommendations on financial institution performance. We found that financial institution performance was positively impacted by private REIT recommendations, negatively impacted by public REIT recommendations, and unchanged by direct real estate ownership recommendations — concluding that financial institutions benefit the most from financial advisors who recommend private REITs to their clients.

The need to explore private REITs

Our study finds that financial advisors perceive the risks and returns of real estate investments differently. Acknowledging the differing needs, requirement, and risk/return preferences, shows that private REITs offer an optimal balance of risk/return making it a strategic portfolio inclusion. Although more research needs to be conducted to see if these perceptions are held beyond financial advisors, our work demonstrates the advantages of alternative real estate investments.


Boudry, W. I., deRoos, J. A., & Ukhov, A. D. (2020). Diversification benefits of REIT preferred and common stock: New evidence from a Utility‐based framework. Real Estate Economics, 48(1), 240-293.

DiBartolomeo, J. A., Gatchev, V. A., & Harrison, D. M. (2021). The liquidity risk of REITs. Journal of Real Estate Research, 43(1), 47-95.

This commentary and the information contained herein are for educational and informational purposes only and do not constitute an offer to sell, or a solicitation of an offer to buy, any securities or related financial instruments. This article may contain forward-looking statements. Readers should refer to information contained on our website at for additional information regarding forward-looking statements and certain risks associated with them. This article was produced in collaboration with Grant A. Wilson, Ph.D., Assistant Professor, Faculty of Business Administration, University of Regina, and research consultant for Avenue Living.