The Covid-19 pandemic and the cost of living crisis have impacted how open families are about finances, according to More2life’s latest bi-annual vulnerability report.
Later life lending clients are twice as likely to involve their families in the equity release process in 2023 (43%) compared to 2019 (19%).
the equity please provider said that family involvement is particularly important as 84% of advisers agreed that involving families in the equity release advice process allows them to air any concerns which can then be addressed. While FOS only upheld 12% of the 391 complaints about equity release in the year ending in March 2023, 77% of advisers believe that boosting family involvement could see fewer complaints lodged in the first place.
The research, which polled over 330 independent advisers, indicates that more later-life lending clients are discussing their financial decisions with their families. In 2021, most advisers (83%) said the biggest barrier to clients involving their families was because, as adults, they did not want to include family members in day-to-day financial decisions. This figure dropped to 74% in 2023 as fewer borrowers viewed this as a loss of independence and more saw it as a normal part of financial planning.
The report found that clients had other reasons for not discussing their finances with their families. Half of the advisers polled (50%) said that their clients did not want to worry loved ones by involving them in financial decisions. As a result, advisers were sometimes required to reassure clients and to encourage family involvement, especially if the client was identified as vulnerable.
While some clients had family support, others did not involve their families because they were not close enough to actually share any details. In another 31% of cases, advisers also reported that clients were too proud to admit to their families that they were in financial need.
While some clients worry that openly discussing these financial decisions could upset their families, 85% of advisers said that client families were generally pleased to see an older relative take steps to improve their quality of life.
Given that the Bank of Mum and Dad is playing a bigger role in supporting younger people, it is notable that almost two-thirds (64%) of advisers said that client families were interested in how equity release might help their financial situation, up from 60% in 2020.
In contrast, a minority of advisers – just 13% – reported that client families were simply uninterested in a later life lending claim altogether. Similarly, only 10% of advisers said that client families were surprised to learn about an older relative’s financial situation.
Ben Waugh, managing director at more2life, said: “The rise of the “pre-inheritance” and the impact of the pandemic followed closely by the cost-of-living crisis has encourage families to have more open financial discussions. This has translated into twice as many older borrowers involving family members in later life lending discussions – a natural evolution as the proceeds are often used directly or indirectly to support loved ones.
“That said, some borrowers still worry that by involving family in the advice process they will raise concerns, or they may find that their independence is impacted. However, the converse is actually true with 85% of advisers suggesting that family members who do know are generally pleased to see them taking steps to improve the quality of their retirement and delighted when they find that they might also benefit.
“Whether a client is vulnerable or not, family involvement is vital – especially as the choices around products, features and interest rates can impact the estate over the long-term. Robust discussion and a greater understanding of the reasons behind the eventual decision can help to not only avoid complaints but ensure that families do not receive a shock at a later date.”
