Professional qualifications can open doors for advisers and set the bar for any given area of financial planning. But to work in everyone’s interests they need to be built upon rather than left to gather dust or wheeled out only on rare occasions alongside the best china.
The FCA’s consultation on whether to launch a standalone equity release qualification or a top up to existing pensions or investment ones has received a mixed reaction from the industry so far.
Could a qualification that is independent of the broader mortgage one currently needed to advise on equity release help to grow the market by attracting more advisers? If so, could this raise awareness of equity release, bringing about a more competitive market for the benefit of consumers?
Or on the other hand could it be detrimental to consumers in giving generalist advisers a shortcut that enables them to “dabble” in a specialist part of the advice market? And is there even much interest in advising on equity release?
SimplyBiz Group compliance director Gary Kershaw says the regulator wants to get an idea of how many advisers without an appropriate mortgage qualification would be interested in achieving the standalone one to sell equity release. Interested to find out the initial thoughts of the group’s members, it issued a few survey questions.
It found 93 per cent of respondents, which includes those already authorised, are interested in advising on equity release. “The vast majority believed an equity release service would be valuable to clients as part of their overall financial planning,” says Kershaw.
So should the equity release industry brace itself for a stampede? more 2 life channel marketing director Stuart Wilson says that, while more advisers entering the space would be welcome, it should not be at the risk of diluting the level of professionalism in the sector.
“This is not a market for ‘dabblers’ who will potentially undo the excellent standards that have been built up over the last quarter of a century,” he says.
Wilson also points out that many advisers are already qualified to advise on equity release but do not practice in this market. He says: “While the standalone qualification appears to make sense, we believe it is actually the wrong answer to the wrong question. The question should really be: how does the industry engage or re-engage with the 7000 or so advisers that could be delivering advice already with their existing qualification, but are not doing so?”
“This is not a market for ‘dabblers’ who will potentially undo the excellent standards that have been built up over the last quarter of a century.”
Retirement Advantage head of marketing for equity release Alice Watson hopes the FCA proposals will encourage more pension advisers to talk about equity release as part of retirement planning, so that it is seen as more than just a mortgage and demand would increase.
“This will only happen if those who become qualified write regular equity release business,” she says. “To be able to do that, ongoing dialogue between the equity release industry and advisers is critical, so that both parties are abreast of evolving customer needs.”
She adds that the qualification would need to promote the skills advisers must have to discuss equity release with clients in a meaningful way.
“That means it including a basic understanding of mortgage underwriting, property valuations, legal charges, secured lending and the conveyancing process,” she says.
For many, the priority is raising awareness of equity release as a viable option for older homeowners, whether that is supported by a standalone or a top-up qualification.
“As an industry we should be helping brokers to break down the negative connotations previously associated with this market,” says First Complete and Pink sales operations director Toni Smith.
“If an extra qualification on equity release would help to achieve a healthier housing market overall, then we would welcome it.”
Adviser View: Ian Bavey, mortgage specialist at Seer Green Financial Planning
A standalone equity release qualification could be problematic, given that new mortgage products are being launched by more and more lenders that offer standard mortgages to people aged over 55, as well as lenders offering standard mortgages into retirement.
If equity release advisers do not have the standard mortgage qualification, how would they be able to compare the two types of products and offer the best option to the customer? My concern is that equity release-only advisers would end up advising customers to take out an equity release or a lifetime mortgage product when a better or cheaper option may well have been available through a standard lender on a standard mortgage. To offer full and robust guidance advisers would have to have both qualifications as the market in this area is constantly changing.