FSE Glasgow 2016: Equity release is growing despite 'myths'

Speaking at the Financial Services Expo Glasgow today, Equity Release Supermarket's Gary Webster laid to rest some of the common myths around equity release, calling it 'an area which some advice firms won't take on'.

Related topics:  Retirement
Amy Loddington
16th March 2016
old oap elderly retired retirement pension

He acknowledged that the product ‘is not for everyone’ but could still be a ‘real solution’ for some clients at or nearing retirement.

He noted that the market for equity release was growing with the ageing population, making it a good area for brokers to explore, and added that another market driver was the increasing tendency for retirees to rely on their property wealth to supplement their income after retirement.

He said:

“The average defined contribution pension pot sits at about £25,000 to £30,000 – and, mapped against the average value of property in the UK, we can see the average property is worth almost ten times the value of the average pension pot. That obviously creates a market driver – most clients don’t have the means to meet their expectations of earnings in their later years with just their pension.”

Some of the ideas that commonly surround the equity release market, Webster said, were justified. As products designed to run the course of the consumer’s life, the products can attract high early repayment charges – although he noted that there were a variety of products with defined ERC options built in. Others, however, he said were “not entirely true”.

Interest rates, for example, have been driven lower by increased competition in the market – something which he also says has driven further innovation in ‘more versatile’ plans.

The seminar, entitled ‘Debunking the Myths Around Equity Release’, was held in the AMI & Financial Reporter seminar theatre at FSE Glasgow, the first of four Financial Services Expo events to take place this year.

Webster concluded the session by noting that, generally, equity release firms welcomed the FCA consultation into the sector announced earlier this year.

He said:

“It’s right and we welcome it, because some of these misconceptions will be cleared up.”

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