Pre-Credit Crunch for instance, estimates of the number of mortgage advisers in the UK normally hit the 20,000 mark – this might have had something to do with the fact that £350 billion of gross lending was being written. However, come up to date, and even with the growth in the market over the last 18-24 months, we are probably down to 10,000 mortgage advisers although if that growth does continue I expect that number to increase gradually.
And what of the equity release market? Given that, at best in the last five years, we have seen under £1bn of lending each year then it is perhaps no surprise that estimates are around 800 active equity release advisers working today. This estimate came recently from Bower Retirement Services who were predicting what adviser numbers would be needed in five years’ time to keep up with demand.
800 advisers for the whole of the UK doesn’t seem a lot – indeed, given the increase in interest and demand for equity release products over the last 12 months, it might seem like some areas of the UK are rather underserved. And to a large degree, that is correct. I would suggest that many of those 800 are congregated south of Birmingham which might leave potential customers rather exposed the further north you travel.
Which is perhaps one reason why Bower have suggested that the number of equity release advisers needs to double by 2020 if the advisory sector is going to be able to cope with the increased levels of business expected. The suggestion is that the total number of equity release customers will double by 2020 – up from 21,300 last year to 42,100 in five year’s time. Given the importance of advice in the equity release transaction you can see why there is a belief that more bums on seats are needed if we, as an industry, are going to cope.
This forecast does develop a number of interesting discussion points though. At present I would suggest that the number one conversation I have with equity release advisers focuses on how they can bring in new leads and conduct new business. Without doubt, it is a shortage of customers that tends to exercise the minds of advisers at the moment and therefore I can’t help wondering if much of the increased volumes of equity release business anticipated couldn’t be taken up by the existing practitioners in the marketplace. After all, we have spoken about the forthcoming years being a ‘good time’ to be in equity release advice – one might suggest that existing advisers would be able to cope with much of the increased customer interest.
The other point is around where those new advisers might be needed most – will they continue to launch and operate in areas where the equity release adviser population is actually pretty healthy, or will they be focused on areas which are currently underserved? This is an important point because I don’t see the need for equity release being confined to certain parts of the UK; this is a product which can be a solution for people all over the country and therefore 800 new advisers situated south of the Watford Gap is probably not going to support a wider take-up of products.
No-one can argue against the importance of the specialist adviser when it comes to equity release and therefore it looks likely that we will need some joined-up thinking when it comes to advice provision going forward. Of course, some customers will be happy to talk through a product choice over the phone, however others will not and therefore we might have to be a much more technologically savvy bunch when it comes to the delivery of advice, particularly for those who do not live close enough to benefit from seeing an adviser face-to-face.
It is clearly positive that the equity release market is growing and there is greater knowledge and interest in the sector, however we need to make sure that the advice profession keeps pace and adapts to the growing customer needs around this increasingly important product solution.
