LV= says its latest research reveals 80% of advisers new to the equity release market believe it will be seen as a mainstream financial product in the next few years.
86% consider equity release to be a significant future growth area for their business, while 52% of advisers are already reporting a recent increase in client interest in equity release products.
Advisers believe that the main reason (67%) the equity release market will grow is because of their clients’ need to cover their pension shortfall.
23% believe that the rise in clients who need to pay off their mortgage and other debts will drive demand for equity release in the coming years, and 17% think that it will be a result of people wanting to fund long term care.
When initially discussing a client’s retirement plan, 82% of advisers believe that the equity in a property should be included as part of this process, and discussed at the same time as annuity and investment options. However, the findings show that clients’ outdated view of the market and their concerns about leaving an inheritance for their children remain two of the biggest barriers advisers face when discussing equity release with clients.
31% of advisers admit that it was their own lack of understanding about the equity release market which had stopped them from writing equity release business.
Vanessa Owen (pictured), LV= head of equity release, said: “What advisers have told us indicates a shift in the view of equity release being a product typically used to fund luxuries such as holidays and conservatories, to one increasingly needed to help cover the day-to-day cost of living. With more people reaching retirement with an income that falls short of their expectations, equity release products look set to play an increasingly important role in funding retirement.
“For many clients, their property is their single greatest asset so it is encouraging that advisers believe the capital tied up in property should be discussed at outset when financially planning for retirement, rather than after people have retired.
“As an industry we have developed in leaps and bounds in recent years, but we cannot afford to be complacent as there are clearly still misconceptions about equity release among advisers and clients. However, it is encouraging to see a huge increase in the number of advisers wanting to attend our roadshows to find out how to start advising clients on equity release.
“We also offer access to a marketing toolkit, providing advisers with their own-branded advertising material and client communications to help generate new business, promote and raise awareness of equity release.”