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Later life advice and long term care could be the future

Without wishing to sound alarmist, are we about to see the biggest ever change to the equity release market since it was established? And will advisers be ready for it?

What do I mean by those questions? Well, consider a number of recent developments which seem to show the way ahead and perhaps show that the writing is on the wall for ‘stand alone’ equity release advice.

Firstly we have seen the launch of the Society of Later Life Advisers in January this year; this has been followed by the SHIP, the equity release trade association relaunching/rebranding itself and its external output; finally the Joseph Rowntree Foundation recently published its report, Options for care funding: what could be done now?

Looking first at the Joseph Rowntree report, everyone knows the current State funded long-term care model is too expensive financially, whilst also being patently unfair and unsustainable. The pressure on the system is not going to go away any time soon, indeed, it is estimated that by 2050 the cost of long-term care will have increased fourfold as the number of people living over the age of 85 doubles.

Providing full-time residential care to this growing number of people will not be achievable. Plus, we are all coming to the conclusion that this type of long-term care is often not in the best interests of the individual (or the State) anyway. For many elderly people home-based care (when it’s medically appropriate) is a much better option bringing far more positive outcomes than residential care.

Allowing people to receive long-term care in their homes is estimated to cost just one quarter of the cost of residential care for the same person. Most people given the choice would prefer to stay in their home, rather than move to a care home. This option often keeps them close to both relatives and friends living nearby. It also costs far less for them personally, their family and the State.

With home-based long-term care being the preferred option for all stakeholders, the Joseph Rowntree report looks at the ways in which this might be paid for, with a new shared funding contract between individuals and the State. Rather importantly, equity release could be the key to the success of this contract.

If people increasingly live in their homes receiving long-term care, it seems likely that equity release will be called upon with increased frequency. One estimate of those individuals claiming pension credit alone puts the total value of their housing equity at over £1 trillion. It is my belief that no Government is going to allow that potential pool of funding to go un-tapped.

Therefore, we can see a short-term future whereby equity release is going to be part of the suite of advice for the elderly with far more cross-over with long-term care advice and State benefits. Advisers are unlikely to be able to stand in isolation only offering advice on one of the above.

Any advisers hoping to specialise in equity release alone need to seriously consider broadening their proposition, either by collaborating more closely with other specialist advisers or up-skilling themselves. For some, this will inevitably mean additional study and qualifications such as the Certificate in Financial Planning & Long Term Care Insurance or the FSSC Advanced Apprenticeship in Advising on Financial Products (Long-Term Care Insurance Pathway).

The Society of Later Life Advisers has been set up in recognition of the fact that advice in one area is intricately linked to advice in the other. It provides an accreditation which assesses the advisers’ ability to apply the knowledge from these exams into real-life situations which involve all aspects – equity release, IHT, LTC, etc. It’s called the Later Life Accreditation and is available through the Financial Services Skills Council. This, I would say, is the qualification all advisers should be aiming for if they wish to give the best service to their elderly clients.

There is one last piece of food for thought for advisers which may provide the necessary boost for them to cover off all later life advice bases. If you were thinking of running a seminar would the attendance rate be higher if it were advertised as an ‘equity release’ or ‘later life’ seminar? I think we all know the answer to that. It is obviously the time to embrace ‘later life’.

Peter Welch is head of sales and distribution at Bridgewater Equity Release

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