Cost of living crisis has led more people to drawdown, says adviser

Speaking to FTAdviser, Thom said with everyone adjusting to post-pandemic life, he has started to see a shift back towards people releasing equity to pay for home improvements and to help their families, as well as some aspirational spending such as going on holiday. 

“In addition to this, the increased cost of day to day living has led more people to consider drawdown facilities to give them further security in the future,” he said.

“Having trained as an adviser, I know that a range of options are looked at by specialist advisers but I do think there is still some way to go in making sure that all available options including later life mortgages and Retirement Interest-Only mortgages (RIOs) are fully integrated into the advice process. 

“As a young adviser I think the perception of equity release is certainly something that I can have an impact upon in terms of educating as many people as possible. I see equity release advice as similar to pension advice whereby it’s something that should be considered as part of complete and holistic later life planning.”

Thom has been an adviser for 12 months and works as part of Key Later Life Finances advice team in the North West.

He studied Economics at the University of Manchester and started at Key Group in a non-advice role, as part of the customer engagement team.

“[This] allowed me to gain knowledge in the sector,” he said. 

After a few years, he joined the internal adviser academy training programme and passed CeMAP and CeRER qualifications. 

Thom said one of the most popular reasons people take out a lifetime mortgage is gifting to family - mainly to help them onto the property ladder. 

“Many of my clients believe their children need the funds more now then they will when they pass away,” he said. “In addition to this, showing the clients how the interest compounds over time gives them an idea as to what inheritance they will be able to leave. 

“I always tell my clients that family members are welcome at any appointments if they want them to be there and often this gives them the chance to ask any questions or to raise any concerns they have.”

Maintain standard of living

Meanwhile, 30-year old Nurlana Kerimli (pictured) has been an adviser for five years and works as part of the Key Later Life Finances advice team.

She began advising on standard mortgages including Retirement Interest-Only mortgages (RIOs) and found that in a lot of cases, it was hard for customers over a certain age to meet the affordability criteria. 

“I decided to broaden my scope of advice so that I could help offer more options to customers who couldn’t fit the standard mortgage/RIO box,” she said.

“In the current market, I’m helping a lot of people maintain their standard of living by either boosting income or helping them repay outstanding debt. 

“I think by being able to have a discussion with clients, explaining to them their alternatives and showing them the other options out there, it’s helping customers see that actually, it’s not all about equity release.”

Kerimli explained that giving customers the opportunity to explore other options by referring them in-house to an expert within RIO for example or later life lending, provides the customer more peace of mind and the ability to know that they’re empowered to take up the options and explore alternatives. 

She said that being able to own her own home gave security and peace of mind as opposed to renting a property. 

“I believe the same can be said for our equity release clients who have an emotional connection with their properties and don’t want to lose that sense of security they have developed over their lifetime,” she said. 

“I like to listen and explore what my clients are looking to do, their motives and understand how they got to equity release. I always encourage questions and I like to know if customers have done any of their own research into equity release so I can be on the same page as them.”

She added: “Unfortunately, sometimes I have to do a bit of myth busting because many clients are more familiar with the older equity release plans and may have heard some horror stories. 

“So, I like to be there to offer peace of mind, transparency and keep them fully informed, making sure it’s a pressure free and safe environment for questions and discussion.”

An uptick in enquiries

Covid and the cost of living crisis has led to an uptick in enquiries, according to 28-year-old Ben Atkinson.

Atkinson has been an adviser for three years and works as part of the Key Direct telephony advice team.

Since completing his undergraduate degree, Atkinson moved into a self-employed environment and his first role was to book appointments for Key’s advisers across the UK, as part of the customer engagement team. 

“[This] gave me a real appetite and ambition to move into an advice role. I was accepted onto Key’s internal adviser academy and completed the relevant qualifications two years after joining the business and I have been an adviser ever since.”

Discussing industry trends at the moment, Atkinson said: “Covid and the cost of living has resulted in an increase in enquiries from people looking to improve their income in retirement.”

He said looking at his own current client base, home improvements have been put on hold over Covid and they are now looking to fund these alongside helping family members and having a bit more flexibility with their finances.  

“Keeping on top of what is happening in the industry is really important and since the FCA report in 2021, there has been more focus than ever on tailoring the suitability report to the client conversations and being clear on the advice given, even if the client has decided to decline the advice,” he said.

“Any adviser, no matter their age should focus on client outcomes and any new starter at Key is trained to recommend the most suitable option – even if it isn’t equity release. This is reinforced when you become part of the adviser team and I really enjoy helping my clients to fully understand their options.”

However, 28-year-old Sam Crompton argued that the current state of advice is “better than ever”, as advisers are going further into the client's circumstances to make sure the right outcome for the client. 

“In addition to the training I’ve done, there are some great processes in place to identify potential vulnerable clients,” he said 

“The range of products is much larger as well, meaning there is normally a product to suit most individuals.”

Crompton, who has been an adviser for six years and works as part of The Equity Release Experts advice team, in the North West area, said he has noticed more people doing equity release to help family onto the property ladder and generally more clients that want to release equity to meet a desire rather than a need. 

“People are starting to see equity release as a good opportunity to access money to help both themselves and their family,” he said. 

“A lot of the negative stigma and myths surrounding equity release seems to have faded out in the past few years.”

Atkinson added that being a younger adviser has pros and cons but he focuses on ensuring that the advice he provides is right.

"Being younger, I am perhaps closer to the age of those receiving the gift than some of my clients and can help everyone to understand the impact of these choices. It can be tricky, but I also look to prompt a family discussion when certain family members will not be receiving a gift to avoid complications in future."

sonia.rach@ft.com

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