Sera vision

January Retirement Strategy

Equity release has failed to fulfil its potential because there is no one batting for the smaller specialist adviser. But this is about to change, according to Simon Chalk, founder and chairman of the Society of Equity Release Advisers.

Chalk, who is director and equity release planner of Mortgage Portfolio, believes that smaller advisers are key to the future growth of the equity-release market and he is aiming to ensure that their voices are heard.

The last two years has seen the launch of three different representative bodies for equity release - Specialist Advisers for Equity Release, the Society of Later Life Advisers and the Independent Equity Release Adviser Alliance have all launched. But Chalk is dismissive of suggestions that Sera comes at a time when advisers selling equity release have more than enough organisations to represent them and says Sera will represent the backbone of the ER market.

He says: “We are very different to Specialist Advisers for Equity Release, for example, because it only represents the big boys who do 50 per cent of the country’s ER business.” Safer could even be a bit of a protectionist body, adds Chalk. He says Solla has made two operational errors, making Sera a better bet for advisers.

He says: “First, the organisation is primarily South-west based and although it has other members around the country, it has done very little to extend its membership beyond that. Even though we only have four founder members, we already represent most of the UK.”

Second, Chalk says Solla’s structure is more like a network or master broker. He says: “This means it is dictating its terms to members and that stifles independence.”

Chalk is adamant that Sera is a different offering. “Never before has there been a trade body like this, the society will have a revolving chairman to ensure that fresh ideas keep the debate going and we will campaign for ongoing quality of advice.

“This is because equity release is a product which is badly in need of some good publicity and this is what we at Sera aim to do after all the needs and wants that can be met by releasing equity have not and will not disappear.”

Sera will aim to help develop the equity-release market by including advisers from every retirement planning scenario. This is the only way that equity release can realise its potential, says Chalk.

“Equity release has not taken the share of the retirement market it by rights should have done. Every demographic ticks the box. The average pension fund, for example, is £26,000 while the average property is worth five times that.”

Chalk says the four founder members of Sera are all experts in their field. They include Geoff Charles, managing director of Bower Retirement Services, Ian Howarth, a consultant with Parker Kelly Financial Services, and Roger Marvin, an IFA with Charles Cameron & Associates.

Chalk says: “Geoff is our technical expert while both Ian and Geoff have long-term care and equity-release experience that many of us in the industry can learn from.”

Expertise aside, Chalk does not believe that lack of confidence and fears of another collapse in house prices will impact on business. He says: “With property prices still higher than they have been for decades and with such low levels of pension savings, equity release is going to be a big tool for so many people.”

What is stopping equity release from having its day is the emotional attachment that many homeowners have to their property.

Chalk says: “What we are dealing with is the reluctance of many homeowners to let go of what they see as their only asset.

The older generation can use their home to help boost their pension fund or pay for long-term care. Also, many of these older people will have seen their property value rise over decades so they will not have the issues with fears of negative equity, etc.”

But for the market to really take off, social obligations and emotional attachments aside, Chalk says equity-release products need to evolve. “The problems is that most products have to close when someone moves into care so there is a product issue there.”

The withdrawal of Prudential from the market, might be seen by some to have been a huge blow to equity release but Chalk is upbeat about the firm’s departure. “Prudential did not really tackle the IFA market, they did not make the effort to engage with advisers.

Compared with LV and Just Retirement, which make the effort, and you can see why Prudential did not do so well.”

Chalk says he is so confident that Sera will be successful that it is prepared to consider some kind of alliance with Solla members.

He says: “We will, maybe at a future date be happy to offer members of Solla who are IFAs and who do a bit of equity release some kind of branch arrangement.”

 

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