IFAs must capture health and lifestyle picture of each client

Many financial advisers are failing to ask the right questions when it comes to health and lifestyle underwriting for equity release clients who want to guarantee inheritance, according to Key Retirement.

However, capturing details of health and lifestyle are just as essential for lifetime mortgages as for annuities because of the enhanced benefits that can be gained, the over-55 specialist lender said,

The lender said one of the major reasons why planners fail at this is due to a lack of understanding around how an increased LTV can also provide an increased inheritance guarantee even if the higher LTV is not actually required to meet their target need.

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However, by answering a simple set of health and lifestyle questions, which primarily only require yes/no responses, an instant decision is provided clarifying the LTV that can be achieved, the provider said

Dean Mirfin, technical director at Key Retirement, said: “Whether clients are looking to secure the maximum LTV or the best guaranteed minimum inheritance, it is essential that they are underwritten. Advisers should be underwriting every client as the enhanced borrowing or availability of greater guaranteed inheritance may prove vital and needs to be explored with every client.

“It is essential that all clients are provided with the full picture so that, along with their adviser, they can effectively review their needs and priorities against the widest range of options available. This cannot be done without capturing health and lifestyle details for every client.”

Adviser view

Kevin Croker, independent financial planner at Crokers Financial Planning, based in Derbyshire, said: “I do not agree with this assessment. I think financial advisers do ask the right questions on health and lifestyle when it comes to equity release. We have to complete a comprehensive fact find of our clients as standard.”

Alan Lakey, partner at Highclere Financial Services, based in Herts, said: “There are certain areas of advice where you can’t get away with having a lack of knowledge, and equity release is one of them. You would expect people who have worked hard to obtain their equity release qualifications to have the required knowledge.”