This month, I want to move away from the retail distribution review and take a look at something completely different.
A publication entitled Making the Most of Equity Release was recently published by the Smith Institute and anyone interested in, or currently authorised to advise on, equity release should take a look at it.
The booklet sets out a series of views on all aspects of this financial strategy. I describe equity release this way as it is not a financial product, despite the way it is often marketed and sold.
As I am sure you all know, equity release can be achieved through a lifetime mortgage or home- reversion plan, two completely different financial products.
The report is written by people who are clearly experts in their field. They cover everything from the state of the equity-release market, the way it is regulated, attitudes and perceptions, how equity release can assist in funding long-term care and supplement pension income and the importance of good legal and financial advice.
There are numerous quotes throughout the book that refer to advice, with statements such as “people need to know where to get advice and, importantly, who can be trusted to give help”, and “notwithstanding the evident need for improvement, the quality of financial advice is improving, with more and more advisers realising that equity release is just a part of an overall holistic financial planning process, sitting together with pension, care and inheritance tax planning”.
This presents a confusing picture. I can see clearly the benefits that equity-release products can offer and believe it has a rightful place in the market. I also fully support the desire for a professional and trusted adviser community.
However, to achieve this, I question whether both the level of the current qualification (level 3) and the scope of FSA permission is correct.
The fact that an adviser is able to recommend that someone effectively disinvests what is often their biggest asset without being FSA-qualified in investment advice, so unable to discuss their pensions or any investment, makes no sense to me.
I fully support the Society of Later Life Advisers’ accreditation process, which requires advisers to be authorised in investment advice, but surely this should be enshrined in FSA rules.
On the subject of qualifications, for those who are looking to widen or show evidence of their skills, the CII is rolling out four new additions to its framework this year: level 4 certificates in paraplanning and discretionary investment management, a level 4 unit on wrap and platform services and a level 6 unit in senior management and supervision.
These have been added to widen the options for those on the march to chartered status.
Fay Goddard is the chief executive of the Personal Finance Society