A home reversion specialist has warned that advisers active in the equity release sector are still having to work hard to allay a significant number of misconceptions held by clients about the products when they offer their advice and recommendations on the choices available.
The results of a recent survey of advisers by Bridgewater Equity Release reveals that the same types of misconceptions are raised by clients time and time again when discussing equity release.
The number one misconception heard by advisers was the client’s fear that by opting for an equity release product they were somehow giving away their children’s inheritance, while a third of respondents said the client’s belief they would lose their home by taking out the plan was the most commonly heard worry. Finally, 25% of advisers said a client’s misunderstanding that they would end up owning more than their home was worth was the point most often raised.
Not one adviser believed the most common misconception held by clients was that they would end up losing all of their State Benefits by taking out an equity release plan.
Advisers were also asked to rate the level of knowledge clients had about equity release in general and the specific products before they met with them. 58% said most clients had heard of the products and had a basic knowledge, while nearly 18% said their clients had no knowledge at all. The same number were found to have conducted some research and had a fair knowledge base while just 7% were said to be clued up about the products and the various pros and cons of taking out a plan.
The survey was completed by all attendees at Bridgewater’s series of Masterclass seminars this year and highlights the ongoing battle those within the equity release sector have in terms of educating the public about the products.
Chris Prior, Manager, Sales and Distribution at Bridgewater Equity Release, commented:
“The equity release sector continues to work hard to educate and inform the general public and specifically those in, or reaching, retirement about the products themselves, their potential benefits and, rather importantly, what circumstances will not arise should they opt to take out a plan. However, as can be seen from our survey results, we still have some way to go in order to eradicate the common misconceptions that are still held by many potential customers. Notions about losing one’s home or having to pay more than the home is worth at the end of any term are still widely held as is the belief that opting for a plan somehow means they are giving up their children’s inheritance.
“It is disappointing that after years of the Equity Release Council’s Code of Conduct, previously the SHIP Code, being in place and the Council pushing its key messages we are still faced with a customer base which believes they will be giving up too much by opting for a plan. We need to continue to highlight the existence of a no negative equity guarantee offered by Council members and to stress that plans exist, notably home reversions, where a customer is able to guarantee the amount of equity they hold onto in order to ensure they can pass on the remaining percentage to any beneficiaries. Plus we need to stress the fact that the customer will stay in their home for the rest of their life or until they move into long-term care – no provider will be taking their home away from them.
“While it appears that customers are much more likely to come armed with some knowledge about equity release before dealing with an adviser, it is still the case that this type of mis-information is taken as fact, and this is a significant obstacle in the way for advisers to clear. We must ensure that our campaign to provide totally transparent information about equity release continues and we need to focus far more on ensuring these types of misconceptions are not holding back customers when their fears can be easily allayed very early on in the process.”