At a business premises in Preston, Key Group, the equity release specialist, is based on two floors, but only certain people can go through the entire office.
One of these is Dave Harris, managing director of More2Life, the company’s lender of equity release products. His pass will let him through to the rest of the office, but not everyone can – the building also houses Key’s other business, equity release adviser Key Retirement Solutions.
The reason is that there are strict Chinese walls in the business, and More2Life executives must not engage in any adverse lobbying of KRS brokers to get their business placed.
Mr Harris said: “We follow exactly the same method with KRS as we do with all those other 500 IFAs that have registered. We regularly send them marketing material and we follow up on the telephone and use face-to-face consultations.
“We see KRS as a big broker, but I have to treat all brokers the same. My efforts are very much making sure I serve each and every broker the same way so they get to understand the products.We believe we get a share of KRS business that is akin to the market share that we enjoy overall.”
More2Life sprang up five years ago and currently offers two products: the income choice plan, which allows clients to pay interest early, and the enhanced plan, for those with impaired health. Mr Harris says it currently occupies third position in terms of market share, after Aviva at number one and Just Retirement at number two.
He said the market share was 12 per cent, adding: “The reason that IFAs have used More2Life is because More2Life is very innovative and it brings solutions that haven’t existed in the market. We will listen to advisers telling us what is needed and we listen and respond rather than building the product and pushing it to market.
“More2Life was the first lender to produce enhanced loans for people with impaired health and one of the first equity release loans where you could service some of the interest. There’s very much a determination to innovate and continue to bring products that can help the equity release market.”
The real challenge for equity release providers is to convince unconverted advisers that equity release is a viable solution, and should be considered alongside the more conventional list of retirement products.
Mr Harris says that before he joined More2Life he would have held the vie that equity release was for people who were struggling under personal debt. Having got closer to the industry, however, he says that the reality is very different.
He said: “There’s a small proportion of [people wanting to pay off debts], but for many people it’s a part of retirement planning. If an adviser has a super high net-worth client where they’ve got a healthy pension, but do they understand how their house can provide an asset pool in which their retirement can continue to achieve the things they want to?
“It isn’t as one-dimensional as you might think. You might have a super high net-worth doing it with multimillion pound properties.
“A good financial adviser would say: ‘You have X in your DB fund, you have Y in you DC pension fund that you have built up, you’ve got Z in stocks and shares and you have a house that is worth £500,000. You’re typically in your early 60s and your life expectancy is such that you’re going to live 25 years. Let me show you how we can put a plan together to draw on all of your asset pools, so you can lead the retirement you want to lead.’ ”
Building up a business so quickly has meant that the business did not come from nowhere. Mr Harris says that the company’s ability to lend money comes from the fact that it uses the assets of its rivals. Currently the enhanced lifetime mortgage is funded by assets from Partnership while the income choice lifetime mortgage is funded by assets from Just Retirement.
Mr Harris said: “I’m not sure they think it is helping us, it’s a straightforward investment decision. The guys I used to work with [at a life office] were very dispassionate in terms of how they choose to invest in assets.”
Mr Harris’s life office background was largely at Prudential, where he spent five years, followed by four years at Living Time. At Prudential he was distribution and channel marketing director and he worked in a similar role at Living Time.
Despite enjoying his time at the Pru, Mr Harris said: “Prudential is a big company and big companies don’t tend to innovate and move as fast. The difference with a big company is that products are built and pushed to market.”
He went to the other extreme at Living Time, which was a start-up but ran into problems during the financial crisis. Its guarantees were provided by AIG, which was one of the big casualties of the last few years. Ownership of the guarantees was eventually moved to MetLife.
Mr Harris said: “The business (Living Time) survived. There are many, many businesses that failed during that time, and you learn a lot in those moments when factors beyond your control conspire against you.”
While a non-executive director of Living Time’s new incarnation, Primetime Retirement, Mr Harris’s main focus is listening to the market and working out what his clients actually want.
He said: “I want to get out and talk to IFAs and ask what do they think are the opportunities to innovate. There are some ideas we are working on – I want to test these ideas with IFAs and intermediaries.”
Mr Harris’s career ladder
2013 - More2Life, managing director
2011 - Primetime Retirement, non-executive director
2007 – 2011 - Living Time, managing director distribution and marketing
2002 – 2007 - Prudential, distribution and channel marketing director
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