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Advisers accused of ‘exam collecting’ amid dearth of equity release sales

The equity release panel at MM In Focus

Only a fraction of advisers that are qualified to sell equity release products actually do so, new research suggests, as one provider says this is because advisers like to ‘collect exams’.

According to equity release specialists Pure Retirement, around 9,000 advisers in the UK are currently qualified to offer equity release, yet just 500 to 1000 are advising on the retirement product on a monthly basis.

Speaking at the Money Marketing in Focus conference last week, head of distribution at the firm Chris Flowers suggested this is because mortgage exams are not ‘tasking’ and so some advisers may take them simply to boost their credentials.

Asked why the number of advisers actively recommending equity release products is so small, Flowers said:

“There are a number of reasons, but the honest answer is that people just collect exams. You might not like it, but I think people get the idea that they can read on the weekend then go [and take the exam] on Monday.

“Being really honest, it’s not the most tasking of exams and I think advisers think: ‘if I can get a few more points then I’ll get my exam’. I think that’s happened for a fair few.

“People want to be able to take an exam just so they can talk about it, so I think there are a lot of clients that go to advisers that talk about it and say ‘I’ve got the qualification’ but then not actually transact the business.”

FPS London IFA Robert Taylor, who was in the audience suggested Flowers should be ‘careful’ about what he said, adding that he took the exam so as to understand the whole of the market, but has ultimately decided to specialise in other areas.

Just director of distribution compliance Roger Pangbourne said that in his experience, “advisers do not take exams just for the sake of it.”

Earlier in the talk Flowers had suggested that the lack of activity in the equity release market – which totaled £3 billion last year – was due to a lack of education and support for advisers.

“The best way to describe this is like a driving test: the whole process was learning to pass a test and then once you’d passed that’s when you really learned how to drive.

“I think the same can be said for the equity release market, where you sit an exam to be able to pass a test but then once you’ve got that qualification where do you go – what support is out there?”



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There are 21 comments at the moment, we would love to hear your opinion too.

  1. Nicholas Pleasure 11th December 2017 at 9:29 am

    To be truly independent you need to be able to advise on equity release as it may be the correct solution for the occasional client. I wouldn’t call this exam collecting; I’d call it ensuring that you can meet the needs of all potential clients.

    You need to have a good idea of what you are talking about even if you refer this business elsewhere.

  2. IMO, forward planning must be a good thing.

    An IFA can not know in advance whether Equity Release be appropriate for the next client.

  3. Mr Flowers’ comments rather highlight what these events are all about. Providers flogging their wares under the organisers cloak of pretending to educate attendees.

    The speakers pay to be able to present their products, the organisers supplement their bottom line in order to be able to continue to distribute FOC.

    To rather put Mr Flowers straight – those who bother to get educated then fully understand what a colossal rip off equity release is and should only be used as a very, very last resort.

    • Rather a strong and controversial statement Mr Katz – in the same vein as your first paragraph, it seems as though your post is designed to instigate a response which, on this occasion, it has succeeded in doing!

      As for ‘bother to get educated’ then maybe you should consider that there are sometimes situations which even the most educated cannot understand nor comprehend until they have been there and experienced it.

      And by the way, having an education/qualification does not mean you know what you are talking about, nor does being the most vocal.

      • Which equity release firm do you work for?

        I have looked at these for years – even back in the days when Fisher Pru-Smith was flogging endowments on the back of them. I do recall one decent plan many years ago by the RBS I think. It was so good they pulled it!

      • PS.
        “And by the way, having an education/qualification does not mean you know what you are talking about”

        I hope you bear that in mind the next time you visit a doctor or specialist.

  4. Could it be that despite the heavy marketing, equity release is relatively poor value for the majority of clients and those of us qualified to advise upon ER suggest and recommend more valid alternatives?

  5. I took the exam to advise on equity release alongside all the other areas of advice relevant to our retiring and retired clients. I didn’t take the exam to sell equity release in all circumstances. As with all other products, it’s suitable for those clients it’s suitable for, and no-one else!

    • Well said. It appears Chris Flowers is confused over the difference between ADVICE and SALES.
      Advice may not lead to a sale of a product when advice is the service we are providing.
      His linked in prodile shows he has been a mortgage adviser, but only shows qualifications in mortgage and equity release advice, perhaps he shoudl have not only focused on mroe fo what was covered in R01, but considered sitting his full Investment and Pension Diploma before starting talking about retirement issues and the overlap with equity release.

  6. I also find the comments of Chris Flowers questionable!

    I am one of these numbers that is qualified but doesn’t arrange them.

    The reasoning behind this is that during the qualification process it taught me that I’d rarely need to advise on these products as there is usually a MUCH better way around it that is FAR more beneficial to clients than Equity Release.

    If you are playing with a full set of cards you have all the options available to help your clients in the most financially sensible way.

    I suggest Mr Flowers needs to work at the coalface and then perhaps eat his words.


  7. 1) Many advisers take the equity release exam in order to build up their points for their chartered status, with no intention of advising in this market – which is fine, I have qualifications in areas I do not advise in;
    2) Support for those who want to or are already active in the market is important but what would also assist is the education of those who do not advise (whether qualified or not). I often come across scenarios that should have at least considered equity release;
    3) Education should be to financial advisers but also to wealth/tax managers, solicitors, accountants, carers, doctors, etc.

  8. By the same token, was RDR not an exam collecting exercise to reach threshold status? Being more informed does not necessarily lead to more activity in one area.

    I am guilty as charged, but every one of my 550 CII credits has been relevant at some time, giving me the knowledge to discount equity release if it was not right for the client.

  9. I find Mr Flowers comments some what insulting.
    I agree with Gary Bush I rarely need to advise on these products as there is usually a MUCH better way around it that is FAR more beneficial to clients than Equity Release. I havehad the ER qualification since before it became mandatory, my mortgage adviser has it and my apprentice before him had it too and yet between us we’ve still only done 4 or so Lifetime mortgages in over 20 years.
    Our target market/demographic as investment advisers rarely need to resort to equity release, but we want to be able to discuss and advise AGAINST it when it is NOT needed even more so than when it IS needed.
    If Mr Flowers doesn’t understand that then he is an idiot.

  10. I think its just another case of a product provider trying to tell planners and advisers how to run their businesses. We don’t ‘sell’ any products as in the 1980’s and 90’s (e.g ‘let’s have an equity release campaign’) but being aware of them and able to advise where needed and appropriate, is most helpful. Because they are a measure of last resort is why a good planner will explore every other avenue first. The ‘points bagging’ claim is just silly.

  11. And of course don’t forget these plans still pay commission (unfortunately) and any forgone commission doesn’t really impinge on the product cost.

    Also when referring to costs these are buried very deeply in a very long, verbose and impenetrable KFD. When really analysed the charges are truly usurious and on occasion there are third party participants who fund the provider and who pay huge amounts of kick back to them.

    Yes – Mr Nicola it needs shouting about very loudly. The whole thing needs a thorough clan up.

  12. One of the reasons advisers sit the Equity exam is to get SOLLA accreditation. Ironically you don’t need the permissions, just the exam. Another reason is that advisers cannot be bothered or undertake the hassle of sitting the mortgage exam that you have to have to get permissions to advise on an equity release contract. If you are not involved in mortgages then why bother, but to be an accredited Later Life Adviser with SOLLA it is mandatory !!!!

    • I’ve got the mortgage qualification to as have the other two I mentioedn earlier. Again we have the mortgage qualification so we can be confident we can help if this is necessary, but again people with a need for mortgages aren’t our target market, just circumsatcnes sometimes means someone who thought they’d never need a mortgage again needs advice and we prefer to be able to have the conversation without risk of crossing a regulatory line and simply pass anyone who needs to implement a mortgage to a broker who ONLY does mortgages and knows teh up to date situation with the various lenders, which we will not.

  13. There are just too many points her for me to go each one individually, so I’ll try and summarise:
    1) Having exam does not make you an expert – just look at the other drivers on your way home and you will see!
    2) Being ‘independent’ is not the same as being ‘holistic’ (there still seems to be a great deal of confusion over this) – and in this day and age how can you be truly holistic with the plethora of options?
    3) As for ‘next time you visit a doctor or specialist’ – in a way, that is exactly what I was alluding to. Doctors are educated to understand that they do not know everything and to question what they think they know. How many times have we been told something is good for us only for it to be bad and vice-versa? Doctors will stick to their area of knowledge and refer you to a specialist for a more considered opinion….which is exactly the way that we should be working but we don’t. Referring someone for a more considered opinion does not mean that the specialist will take the case on.
    We purport to be all-encompassing which leads us to ‘jack of all trades and master of none’.
    So yes, I will bear it in mind the next time I see a specialist but I will also question the validity of the advice being given, how up-to-date that adviser is and what other options may be available.
    4) ER = Poor value? I refer you to Perryn Edwards post “It’s suitable for those it’s suitable for, and no-one else!” The problem is that too many advisers don’t give it fair and unbiased consideration.
    5) “The whole thing needs a thorough clean up” – careful of what you wish for….we may not be far off from having to record a full report (by a suitably qualified and authorised adviser) on why something has not been recommended, including ER, mortgage, bridging, cashing in a pension, selling a kidney, etc.

  14. Everybody has to be paid whether by fee or commission so that is irrelevant.
    If you are referring to the amount then that is a moot point. Any comparison with ‘regular mortgages’ does not take into account that mortgages can be re-brokered on a regular basis whereas lifetime mortgages are rarely re-broked.
    As for costs? Free surveys usually and additional legal fees if using an Equity Release Council arrangement. As for the Early Repayment Charge, they are improving. Some deals offer a fixed percentage over a known period of time. Some of the providers also have features that allow for repayment of capital without penalty.

    You know as well as I do that there are terms and conditions to every contract that will be profitable, biased or onerous to one or other of the parties involved at some time or other and/or in exceptional circumstances – just look at marriage!

    • A facile response. Commissions are not acceptable – that’s why the FSA banned them for investment products. The charges that the providers levy are a disgrace and you still haven’t addressed the matter of third part involvement – that adds to cost.

      I don’t refer to repayment. If people are daft enough to take one of these then presumably they are very rarely in a position to redeem.

      I also wasn’t debating the re-broking of mortgages – which in this context is a little beside the point.

      I presume you are speaking for yourself – because my (very longstanding) marriage is far from onerous.

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