Age Partnership is a financial advice business that is also trying to make the most of this upswing in the equity release sector.
Set up by chief executive Tim Loy and his business partner Andrew Thirkill, the company has grown rapidly in the past nine years, taking on 110 staff and seeing its salary and administration costs go through the roof.
Mr Loy said: "We aim to grow as fast as we can but at a rate we can manage. Our target for the first half of the year was more than 70 advisers over the phone and 50 face-to-face. We think the business has great growth potential. We will most likely do an IPO at some time in the next 18 to 24 months, but we have to get it ready to be at that stage and depending on what happens in the markets."
Changing demographics
Age Partnership is fast catching up with the market leader, Key Retirement. It generates a lot of its interest through TV commercials. The majority of its advisers are based over the phone, given that the office is in Leeds, but it is developing the face-to-face side of the business in recognition that some of its clients want a more in-depth conversation.
Mr Loy said: "The equity release market is being driven by changing demographics – it wouldn't have the growth prospects without the changing demographics. We think we can move the business into providing the entire range of services – doing their LPA, their general insurance or home, dealing with your over-50 plan."
The situation has also been helped by the changing perception of equity release. As stock markets continue to be unpredictable and savings accounts offer little return, property seems to continue its unstoppable rise.
At the same time, the equity release industry has got its act together and developed its products so that the looming presence of rolled-up interest at the end of the term (when the house is sold or the policyholder goes into care) can be mitigated by being paid off earlier throughout the period of the loan or even allow for the partial repayment of capital along the way.
Low interest rates also means that with a product charging 3.9 per cent, the debt if left untouched doubles after 17 years, rather than 10 or 11 years, which was the case when the rates on these products were charging 6 per cent.
Mr Loy said: "You can stop the roll-up of interest by making regular payments of all or some of the interest, or you can make voluntary payments with no early repayment charges. If you choose not to make any capital repayments then the debt does increase. But there are not many products where you can get the rate fixed for an indefinite period.
"People are able to do it because they're sitting on so much equity; they're becoming better educated, and the government's stance towards equity release is pretty favourable, while the FCA is pretty pragmatic. It is seen as a means of filling the gap that exists and it has lost some of its stigma."
Emphasis on quality
Mr Loy, who is a chartered accountant and entrepreneur by background, has adopted an unusual approach to his business. In an attempt to control his workforce, all new recruits go through the company's 'academy', whereby they are trained in mortgage and equity release qualifications. In addition, once through the academy, they are not paid commission, at least not in the conventional sense.
Mr Loy said: "We take away incentives for an adviser to over sell – others do give commission based on value. Advisers get some commission, but we've put greater emphasis on quality and the happy customer and compliance."
Age Partnership runs a commission system based on the satisfaction of the client. If an adviser gets a high score from their client they receive a small bonus in their monthly pay packet for each happy customer. Mr Loy said: "We're trying to create a culture where all our advisers are passionate about customer service; every time we get real time feedback it will appear on the screen in the office." There is no penalty if the adviser receives a negative score.
Some of these practices might seem strange to the advice sector, but it becomes clearer knowing that Mr Loy's previous enterprise was running laser eye business Ultralase. He claimed there were similarities to running an advice business: "You don't get your eyes lasered on a whim and there's a bit of a negative perception about both industries. There were similarities with conversion rates and drop out rates, and the marketing model we developed at Ultralase we transferred."
However, he admitted it was still tough starting out in an advice business, in which he had no experience. He said: "We were on a pretty steep learning curve from day one. The business I came from was regulated, but not to the same extent. We had had to make sure that our eye clinics were run in a similar way, but it wasn't as enormous as the FCA. You also have the requirements of the Equity Release Council, which was another degree of self-regulation."
Nevertheless, Mr Loy is ambitious; from a start-up 13 years ago to having private equity executives beat a frequent path to his door, Mr Loy is keen that his company catches the wave as equity release comes back into the mainstream.
Melanie Tringham is features editor of Financial Adviser
Tim Loy's career highlights
2005 to present
Chief executive, Age Partnership
2000 to 2005
Finance director, Ultralase
1993 to 2000
Finance director, Swifts of Scarborough
1991 to 1993
Accountant, MTM Group
1990 to 1991
Accountant, Conder Group
1986 to 1990
Trainee chartered accountant, KPMG
