Almost three quarters of advisers still feel wary of advising on equity release despite the majority of brokers predicting the sector will become mainstream within the next decade.
Research from LV, published today (July 29), found that 70 per cent of advisers felt uncomfortable or unable to discuss equity release with their clients.
More than a quarter (26 per cent) of the 206 advisers polled last month felt the biggest challenge was deciding whether equity release sufficiently suited the clients' needs while 18 per cent thought there was a lack of personal knowledge about equity release products.
Some also thought explaining the complexity of equity release to clients was the most common challenge (21 per cent) while others were uncomfortable explaining the costs involved (16 per cent).
Equity release lets consumers access funds tied up in property either as a lump sum or as a drawdown option. The loans then get repaid when the borrower dies.
Steve Patterson, director at Teesside Money, said the sector needed to update the equity release adviser exam to improve adviser confidence in this space.
He said: “A lot of advisers that have the qualification took their exam some time ago and they have not been active in the marketplace since then.
“The products have changed a lot and become more flexible and there’s more of them.”
Of those polled, 61 per cent saw equity release become mainstream between the next five to 10 years.
Mr Patterson agreed. He thought there were a lot of consumers — such as mortgage prisoners stuck on interest-only policies — who would continue to benefit from the option of equity release.
Although growth in the equity release market slowed in the first half of 2019, the number of plans still increased by 5.6 per cent to 22,126 in the six months to June.
But advisers felt more informed on products as a whole besides equity release, according to the research.
Some 91 per cent felt confident advising on pensions, 74 per cent were happy with annuities while 69 per cent felt informed about tax planning — compared to 25 per cent who felt informed on equity release.
The findings also showed that many advisers saw commonly recurring concerns about equity release when discussing the option with clients.
Nearly half (48 per cent) had clients who thought they would end up owing more than their home was worth while a similar number (46 per cent) had clients who worried they would be unable to leave their house as inheritance.
This was mirrored by their biggest concerns overall, as more than 55 per cent were concerned about future ownership while one in three (32 per cent) flagged taking on more debt as a worry.
The findings showed the most common reason clients asked advisers about equity release was to supplement their retirement income.
Some 63 per cent had used it to bolster their pension pot while 32 per cent wanted to provide financial support for loved ones.
Andrew Gilbert, head of life products at LV, said: “For most homeowners their property is one of their biggest assets – one they’ve probably spent most of their adult life paying off a mortgage or two to fund – and equity release is now increasingly being seen as a mainstream option in retirement and rightly so.