Almost 90% of intermediaries say equity release is relevant to their clients retirement planning, according to new intermediary research from Aviva.
However, while 88% of intermediaries feel their clients may express an interest in equity release at some point during the advice process, only 38% are able to provide advice on this topic.
Of these advisers, 9% regularly provide guidance and 29% say they occasionally provide help on products in this arena. In addition, a further 19% have a referral relationship whereby they either refer the client to an expert within their own company or to a specialist intermediary firm, and 11% say they would look to be able to provide advice if there was customer demand.
Consumer research suggests that there are significant opportunities with equity release as 57% of consumers expect to have a mortgage free property when they retire, compared to just 29% who believe they will have an private pension, 19% who expect to have cash investments and 17% who feel they will own stocks and shares investments.
With regards to making the most of their retirement finances, when a consumer speaks to an adviser, they expect a holistic approach which looks at all their assets. 54% of over-45s want to discuss how to use their total wealth to cover the cost of retirement and 60% are keen to identify how to make their finances as tax efficient as possible.
| Top Topics Over-45s Expect to Discuss as Part of Retirement Planning | % |
How to get the most from your pension | 76% |
How you can structure your finances to make their finances as tax efficient as possible | 60% |
How to use your total wealth to cover the cost of retirement | 54% |
What type of annuity is best for you | 48% |
Budgeting for potential costs such as care | 41% |
Although the majority of advisers offer their customers access to equity release, 32% of advisers say that they do not provide advice on these plans and never would. When the research dug into the reasons behind this, the highest percentage of intermediaries (46%) cited lack of relevant qualifications, yet the relevant training materials are freely accessible on sites such as the Aviva Financial Adviser Academy.
In addition, 20% were worried about the reputational risk posed by these products and 22% said they did not feel that they were currently ‘good value’.
“Equity release products are more relevant than ever when you consider that for the majority of retirees housing equity is their largest single asset, so it is interesting to see how advisers view this product suite,” said Roger Marsden, head of at retirement at Aviva.
“While 88% agree their clients may express an interest in equity release at some point during the advice process, less than 40% say they have the relevant qualifications to help them and only 19% are able to refer clients with confidence.
“This suggests that many advisers are not currently in a position to help should a client express an interest in equity release which is a concern. The main barrier to engagement appears to be lack of qualifications although some intermediaries are still sceptical about the reputation and appropriateness of these products.
“With the demand for equity release only likely to increase in the future, we strongly urge advisers to consider gaining the necessary qualifications or setting up a referral relationship with a specialist. As intermediaries who deal with consumers every day know, clients are looking for holistic advice and going forward helping them to consider how they can use their housing equity in retirement, either by downsizing or other means, should play a part in this.”
