The later life lending sector has sufficient advisers to cope with demand at present but an industry panel has agreed that the expected growth will need greater numbers of advisers to deal with all prospective clients in the future.
Speaking at the Financial Services Expo (FSE) Manchester, the panel outlined the recent figures from Legal & General which suggested equity release lending alone would increase from £3bn now to £8bn by 2021.
Gary Webster, head of partnerships at Equity Release Supermarket, said that more advisers will be required. “We do have sufficient advisers to meet demand now but the sheer number of cases is going to double by 2021,” he said.
“At present we have around 37,000 loans which will rise to above 70,000. Some advice firms will need to be cleverer in the way they integrate with the later life sector. Many firms will need to up their game.”
Paul Carter, chief executive of Pure Retirement, agreed. “There are two things that have historically held us back; one was the amount of funding and the other was the number of advisers. Funders are knocking on our door on an almost weekly basis so we’re getting past that. Now it’s about getting more advisers and there’s a lot of information and support available out there to help do that.”
The panel was asked what the barriers are to future growth in the later life space and the panel suggested there was a number including: engaging with older borrowers, only engaging with either equity release or later life lending not both, and networks not allowing their AR firms to advise on these products.
Dean Mirfin, chief product officer at Key Retirement, said: “In a sense we are our own barrier here. A lot of advisers are still not engaged with older people borrowing. Plus there are still a lot of misconceptions – we get a lot of queries about product issues, for example, which are no longer an issue. Products are now a lot more ‘mainstream’ – we can create a ‘mainstream’ environment with later life lending.”
On the issue of ensuring advisers cover off all options, Mirfin said: “Those who engage with all types of later life lending will be more successful, certainly in the short- and medium-term. I’ve been in the sector over 20 years and I’ve never seen products and rates like we have today.”
In discussing whether certain networks were still putting major barriers in front of those AR firms and advisers who want to be active in the later life space, Steve Cox, business development director of Hodge Lifetime, said: “There is a perceived risk historically with the sector however more networks are allowing advisers to provide equity release advice. The number of qualified advisers within these networks is growing. We’re working with three or four networks that are looking at how they can get a later life proposition off the ground.”
When pressed on whether certain compliance departments were still a hindrance to advisers, Mirfin said: “Compliance has got to change. Compliance is, in some cases, still looking at the sector as if it was 10 years ago. Regulation has changed and the way the regulator views vulnerability, for example, has changed, so compliance has to as well.”
Finally, on the change of rules on retirement interest-only (RIO) products, the panel agreed this was welcome but said it was waiting for lending activity. “RIOs have arrived but we’re not seeing a carnival,” said Webster. “We hope we’ll see some more products coming through soon.”
Cox from Hodge Lifetime said it was just about to launch into this sector: “Within the next four weeks we’ll be launching a RIO. It will obviously be fully-compliant and we want industry feedback on the product. We’re keen to know how it will be received by advisers and consumers.”