FR: The media noise around equity release is always strong however last year total business only reached just over £1bn. Why is take-up still so relatively low?
In the immortal words of Michael Caine 'not a lot of people know [it]'. Part of the problem for our sector is that the message is still not sufficiently getting through to the public about just what benefits equity release provides for the over 55s. There has been a lot of resource placed into educating the public and politicians by organisations such as the Equity Release Council, and it has to be said, by the high-profile advisory firms in the sector. However, there is always more to be done and effectively the sector is still fighting many of the misconceptions that persist from the unregulated/poor equity release-esque products of 25 years ago.
We are however doing the sector something of a dis-service in saying it’s ‘only £1bn’ because the market has grown considerably in the last few years and is still very much on the up. There are plenty of challenges to overcome, not least the ‘home is my castle’ mentality of many British people, and the fact that we preach to homeowners the importance of paying off their mortgage throughout their lifetime and then ask them to take out a ‘lifetime mortgage’ product in retirement. It may be semantics but it can put off a lot of potential customers and, for example, with home reversion plans there is still a misconception that they can be ‘turfed out’ of their home by a greedy provider at any time.
“We are slowly getting there in educating the public on the products, what they can and can’t do, and their responsibilities, but as always it takes time. It should also be accepted that this is a very big decision for people to make and it is therefore understandably that they take their time.”
FR: There still seem to be many misconceptions not just about equity release but the different types of products – lifetime mortgages and reversions. How can this be changed?
Again, to start with a quote, it’s all about, 'Education, Education, Education'. If the information is presented to the public and, rather importantly, in the right manner, then people are a) going to know about the equity release solution, and b) be clear about what the products offer and the differences between them. This is where the role of the adviser is so crucial because they have a major education role to play, not just in terms of educating clients when they sit in front of them, but also educating other advisers and professionals who might be able to introduce clients to them.
Introducers need to be aware of when their clients might be suitable for equity release and, crucially, they need to know who the specialist equity release advisers are so that they can carry out the introduction. So, it’s not just about educating the public but educating colleagues, connections and all manner of professionals.
It would also help if we could move some of the mainstream media away from the negative/scare stories around equity release. Reading some of the articles you wonder if the writer is aware the sector is now fully regulated. Equity release is not about giving your house away or being ‘ripped off’ – the focus has, and should remain, on the positive news around equity release helping the public understand what types of plans are available and how they work.
FR: Can you envisage a day when equity release products attain mainstream acceptability?
I have been in the equity release market a long time - since 2001- and I recall back then there were predictions that equity release would become a mainstream option for people, but that it was likely to take approximately 20 years to achieve this. I tend to think this is a fair prediction and we are probably on track to achieve mainstream acceptance within that timescale.
Society is shifting so much and there are so many challenges faced by the in, and at, retirement market that equity release is already a credible solution for many people. The problems that we are seeing now in terms of low retirement income, people living longer, less State support, the need to fund long-term care, the list goes on, are not going away anytime soon. Therefore, people have to start looking at their biggest asset – their home – and understand they can utilise this effectively in order to maintain standards of living, pay for house renovations, help the kids/grandkids with their home-owning ambitions, etc.
If we can continue this progress whereby people are willing to think of their home as an asset then we will be a long way forward in terms of equity release acceptance.
FR: Can advisers afford to just be equity release specialists in today’s marketplace or do they need to offer a full later life service?
An interesting question and I have for some time been talking to advisers about this very subject. I believe advisers should be able to offer their customers a later life service, whether they provide the advice themselves or have relationships with those that can. It is important that advisers are aware of what the later life needs are of their customers and in order to do this it requires advisers to increase their knowledge. The Later Life Academy for instance runs various education modules on this very subject where advisers are able to increase their knowledge in this area.
It would certainly be beneficial to the client if they could access one advisory service point and be provided with a range of advice across all their later life needs. Indeed, it would be helpful to the adviser as well as, this way, they will earn more income from the client and they will not have their client walking out of the door potentially to another adviser who can service all their needs.
FR: If you were not working in financial services, what do you think you’d be doing?
I started my working life as an engineer in 1976 and I feel very thankful that I entered the financial services industry back in 1980. It’s pretty important that you enjoy what you do, and again I’m lucky in this respect so financial services has suited me very well. I don’t have any regrets about making that move 34 years ago. For me, my ambitions revolve around being financially independent and enjoying what life has to offer. I can think of nothing better than sitting back in a sunny climate, with a glass of wine or beer, reading a good book and relaxing. It’s often the simple pleasures that are the most rewarding.
