MortgagesOct 8 2015

Equity release experts wanted

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Waves of new customers and the upsurge in lending means there is also a demand for appropriately qualified advisers to recognise the importance of including equity release in the retirement financial planning landscape. Focusing attention on identifying potential opportunities in this area could be one of the better investments an adviser makes going into 2016.

Our recent quarterly figures revealed that in H1 2015 more than 10,000 new customers took out an equity release product. In Q2 2015 alone, we saw a 11 per cent quarterly rise in customer numbers. Equally, the year-on-year rise in customer numbers since 2011 is a clear signal of the levels of long-term demand equity release is currently experiencing.

The industry’s potential is further indicated by household names entering the market with more expected to join them. Emphasising the desire to increase competition among supply and bring new flexible products to the market, advisers and intermediaries are welcoming this trend. This supply will give further breadth of choice in equity release products on offer and ultimately and most importantly will certainly help the customer.

Looking at the reasons for growing demand, these are many. First, older homeowners reaching the end of their working life, are short of the cash flow needed for retirement and eventual care costs. Despite this, they are typically sitting on an asset consistently growing in value – their home. Tapping into housing wealth can play a hugely valuable role in paying off debt, boosting income or covering unexpected costs, while allowing the homeowner to remain in his property throughout. What is more, with MMR closing the door on many other forms of borrowing for over-55s, equity release is now increasingly turned to as a reliable mainstream solution. Although not suitable for everyone, it should certainly form part of discussions on financial planning. This is where the importance of the adviser comes in.

With these trends in mind, investing time to identify and understand the opportunities for utilising equity release looks set to be a worthwhile decision.

With regard to any new equity release advisers having just gained their qualification – or indeed those who have the qualification already but have not so far practised in the area – they can certainly expect to be guided in a well-regulated industry. The Equity Release Council now has more than 400 members, and offers advice and guidance through a large group of peers.

The uniformity of guidelines does not, however, mask the variety of cases equity release advisers face. There are a range of equity release customer types, and their reasons for taking out the product are equally diverse. As such, the onus is still on the adviser to find the specific, tailored product that best suits their client’s needs. The industry is continuing to innovate, offering new flexible products, and advisers are finding the process more flexible and fulfilling.

The council’s Statement of Principles requires that customers are provided with both financial and legal advice before taking out an equity release plan. Clearly, equity release is an important decision, so it is also why all council adviser members encourage customers to consult with dependants and family members and require advisers to ensure the appropriate information flow among family members in the decision-making process includes the specifics around costs, tax liabilities and any impact on benefits.

Customer demand and provider supply have created real momentum for those advisers who are open to increasing their knowledge, expertise and activity in equity release and retirement financial planning in general.

Nigel Waterson is chairman of the Equity Release Council