The financial advice arm of Legal & General was launched at a very difficult time (December 2019) – the same month as Brexit and just months before the full nature of coronavirus was realised.
“It has been an interesting first six months, but here we are and we have survived,” says Sara McLeish, chief executive of Legal & General Financial Advice.
“We wanted to start in one area and understand more about giving advice, so lifetime mortgages is our starting point.”
The division has 18 advisers who are all lifetime mortgage specialists providing advice solely on L&G’s lifetime mortgage offering.
Ms McLeish says: “We only recommend L&G products; a conscious decision because these are really long-term products and we only want to recommend and stand behind our own products.
“We have a really broad range of products and they are very good value for money, so we are confident in being sole tie, we have access to the full range of mortgage products and they are competitively priced.”
LGFA marks a return to the advice market for L&G after many years.
When the decision was made to re-enter the world of advice, Ms McLeish says it was decided it would be done from scratch, rather than by acquiring an advice business.
“We built our own technology and found new premises,” she adds.
“It is really hard to bring in a different culture then try and mould it [into an existing business]. It is much easier to start from scratch and set the tone yourself and create the kind of culture you want to create.”
Customer demand was one of the main reasons for starting LGFA, as more people are entering retirement age wanting to clear debt and outstanding mortgage balances.
Customer research carried out by the company also found that customers wanted to go to L&G for advice on equity release – additionally evidenced by the number of customers calling the company thinking they could get equity release advice.
Ms McLeish adds: “We knew from listening to them they wanted to come to a trusted brand, [or the same brand that] they had their pensions or life insurance with.”
Despite the “growth potential” seen in the equity release market, Ms McLeish says there are still not enough advisers talking about it or the options available.
One of Ms McLeish’s priorities for the rest of the year is to hire new advisers and up-skill mortgage brokers and existing advisers to provide equity release advice.
“Lifetime mortgages are not for everyone, but for the people they are right for, it can absolutely transform lives,” she adds.
One of the options LGFA offers is the ability to pay some or all of the monthly interest.
Ms McLeish says: “This means the interest does not compound, and every month you are clearing the interest you owe on that loan so it stays at [that same amount] for as long as you can continue to make the payments.”