A recent survey from LV= shows that more than 98 per cent of advisers expect a surge in equity-release business due mainly to the shortfall in pension provision.
I agree with the logic but cannot guarantee the tide will turn in favour of equity release without some effort from the adviser community. It could be argued we are already in a period of pension shortfall but the market is failing to meet its potential with annual figures for safe home income plans (Ships) still short of the £1bn total released.
Advisers need to plan for an uplift rather than wait for it to fall in their laps and in order to see the predicted surge, the status quo has to change.
Recent Bridgewater research revealed most advisers expect that change to come from the Government, providers, Ship or a combination of the three. Ironically, none of these can be controlled by advisers and anyone operating in the equity-release are should construct a business plan that does not rely on external stakeholders creating the necessary change.
To be certain of reaping the rewards of a rising market, advisers must take responsibility. It would be nice to assume product providers or the Government will take responsibility for growing the market but any sensible adviser would be unwise to have a plan that relies on it.
Advisers looking to increase their share of equity release should focus on consumer education and customer needs rather than product sales and developing strategic alliances.
There is a need for equity release for a large number of people but consumers seem unaware of this, hence the requirement for more education, particularly from advisers. This can be achieved through local press and radio, seminars, blogs, voluntary work and third-party introducers.
The introducer group is part of the strategic alliance focus and the relationship must be mutually beneficial to the customer, introducer and adviser. An example of this would be an alliance between an equity-release specialist and an advisory firm giving at-retirement planning advice.
With the average pension fund at around £24,000, some clients are not being offered equity release as part of a holistic advice package when, for many, using home equity is highly appropriate.
This principle applies to any advice-driven service for the retired market and would include will-writing, debt raising and debt management.
The first step is to encourage at-retirement advisers to consider equity release seriously as a mainstream component of financial planning rather than a last resort. As advisers are moving their business models for the RDR, now is the time to speak to them about broadening their proposition.
It is common practice in the legal and accountancy professions to refer clients to specialists who are expert in their own particular field. I see no reason why this should not be the case for financial advice.
Providing equity-release advice requires a unique combination of technical knowledge and soft skills many retirement planners either have not got or do not wish to acquire. In this situation, referral is a logical solution to ensuring clients’ advice needs are fully met.
In addition to forging alliances and focusing on client needs, consumer education can also be increased via face-to-face contact from a network of introducers. They can mention the concept to the clients they meet on a day-to-day basis and dispel some of the myths about equity release and reassure customers that when appropriate it is perfectly safe, good value for money and not the solution of last resort.
Consumer education does not have to be seen as a task that is solely the responsibility of the Government, providers or trade bodies.
Peter Welch is head of sales and distribution at Bridgewater Equity Release