Advisers must focus on ‘soft skills’ to reassure older clients as they look to tap in to the growing equity release sector, according to a white paper from the Equity Release Council.
Ensuring the concept of equity release is clearly understood so consumers can make informed choices is one of the key recommendations made in The Equity Release Council’s (ERC) white paper, titled Equity Release Rebooted: The Future of Housing Equity as Retirement Income.
Speaking at the paper’s launch at the House of Commons yesterday (26 April), one of the report’s authors, Dr Louise Overton, said many older people remained anxious about equity release – despite being unsure of the exact cause of their anxiety.
She said: “There is a need to focus on soft skills training on the advice process side so consumers feel confident and have time to reflect on the information to support consumer outcomes,” explained Dr Overton, who is a lecturer in social policy at the University of Birmingham.
Equity release – in which people use their house to obtain a stream of income while continuing to live in it - is a way for asset-rich, cash-poor pensioners to boost their finances during retirement.
The new white paper’s release comes amid rapid growth in the sector, which expanded from £29m in 1992 to more than £2bn this year, with lifetime mortgages becoming the fastest-growing segment of the market.
Dr Overton welcomed a number of developments in the market, including greater product flexibility, lower interest rates and better regulation, which have made equity release more attractive.
“The challenge is to develop ways these can be communicated more effectively,” she said.
“Many recent suggestions have involved online and interactive tools. They may have their place, but research shows verbal communication with a friendly adviser can determine how useful consumers find advice.”
Dr Overton added research has found people are reluctant to admit they have taken out a loan on their home, with people making a distinction between ‘acceptable debt’ and equity release, and that such attitudes are continuing to hold back uptake.
The Equity Release Council recommended using “simple, jargon-free language and making customers aware of the various free guidance tools available” when giving advice on equity release.
Paul Bennett, a Bristol-based equity release specialist at The Right Equity Release, said: “There is a big demand for equity release, and I think there is a training issue with advisers because some are better than others.
"Not all have the soft skills they should have.”
He added that communication of all the options for retirement income was vital, and recommended that this should particularly be done through employers because people sign up for pension schemes when they take up employment.
simon.allin@ft.com
