Q: Are non-equity release advisers often under a misapprehension about products?
A: Without a doubt. If you talk to advisers and ask them to explain what equity release is, invariably they will describe something closer to a shared appreciation mortgage, for example, which died out many years ago, or a home reversion or a home income plan.
Over the last five years this market has gone through more change and innovation than it went through in the previous 25 years. There has been a huge change in terms of flexibility, with modern lending features, capital repayment, interest repayments, for example. Many advisers who are not part of the specialist world are completely unfamiliar with that. One of the most common misconceptions you find is that advisers think rates are high. When you tell them that actually there are products on the market right now that have got MERs and AERs that are as low as 3% and that the market average last year was only about 4.5% – and that’s fixed for life – you get some quizzical looks. It shows how fast this market has moved and how different perception can be from reality.
Q: What advice would you give to advisers who want to do equity release but don’t know where to start?
A: The first thing to do would be to get alongside a specialist firm that can not only give you that route to refer, but can also take you on that journey from being interested and engaged to getting to your first referral. That might include training, education, webinars, and downloads, for instance. There are a lot of organisations out there and I work for a group that has just such a referral channel, Key Partnerships, which has plenty of guides and content to help you do just that.
If your long-term goal is potentially to go further than that into this market, then once you’ve gone through your first few referrals and perhaps even gone out on some appointments with the adviser that’s doing those for you, it’s time to take the next step. So I’m thinking about the mortgage clubs out there. AIR Mortgage Club, for example, has a later life academy, which is a full training suite for advisers that are looking to develop their skills, not just in equity release, but in all later life lending matters such as vulnerability etc.
I would just really encourage people to take advantage of the wide variety of free resources available. It’s certainly not a market to dabble in, there’s lots of complexity and choice in this market now and that’s going to grow. There’ll be more and more products available in the future.
So go and talk to some of the specialists in this market and soak up as much of the information they’ve got as possible.
Q: What part do providers need to play to meet the nascent demand for later life lending solutions?
A: Our job is to help advisers navigate through an ever increasingly more complex world of later life lending. We’ve seen the number of products options increase exponentially over the last couple of years and we have Retirement Interest Only (RIO) mortgages come into the mix as well. At more2life we’ve certainly been looking at ways in which we can guide advisers through that maze and find a way to help them market themselves and position themselves as specialists.
That’s the thing that advisers cry out for the most: how do I promote my services? It’s where providers have been focussing a lot of attention on education and information.
Q: What do advisers need to do?
A: From an adviser’s perspective it’s the other side of that coin. Increasingly, advisers in this marketplace are recognising the need to really talk about what you do as a specialist adviser. Telling your clients about equity release, talking about later life lending, whether that’s on your website, via social media, through a newsletter, podcast or a blog. There’s a need to talk about the opportunities for releasing wealth and using the wealth that’s locked up in your home.
Equity release has traditionally been regarded as a debt consolidation or debt repayment tool. The reality is that it’s now increasingly being used in a variety of different ways, and that has only just starting to dawn on some advisers. Whether it’s the Bank of Mum and Dad or intergenerational lending or gifting. There are all sorts of ways in which the wealth locked up in houses can be used. For advisers, the critical point is bringing that to the attention of their clients.
Q: How is technology helping the sector address the issues caused by the coronavirus crisis?
A: The equity release industry is one of the few areas of the property market that has continued to function during lockdown – mainly due to sheer determination and the use of technology. The use of remote valuations which use the local knowledge of a RICS surveyor and e.surv data – pioneered by more2life – is now widespread and both financial and independent legal advice is being provided by phone or Zoom. Providers have also stepped up the functionality on their portals which will benefit the industry in the longer term. From a tech point of view, we have grown up a lot over the last few months.
Stuart Wilson is corporate marketing director at more2life. This article was first published in the 72-page BestAdvice Later Life Lending Report. To download a free copy of the report, please click here.