A real need for education in the later life lending market

Understanding where the mortgage market might be heading, and which sectors might provide a considerable amount of your business in the future, can be not so much a constant distraction but a constant obsession for many advisory firms.

Related topics:  Later Life
Rory Joseph and Sebastian Murphy | JLM Mortgage Services
18th July 2019
Sebastian Murphy Rory Murphy JLM

We would all like to have a crystal ball which tells us exactly how the market might play out, and where we should be putting our resources and investment, but in reality we don’t, and we probably don’t need one anyway.

It will, for example, not take a genius to work out that the later life lending market is likely to present a strong business opportunity for advisory firms, not just in the future but right now.

The UK’s societal demographics, and a variety of factors such as a lack of pension provision, the need to pay for social care, providing support to family members, the cost of living in retirement, debt repayment, etc, all provide a growing want and need for products such as equity release and RIO mortgages.

The question of course for advisers is how to ‘break’ into this sector, how to ensure your offering clients a full proposition, and not a half-baked one, and what is required in terms of authorisation and qualification, to ensure you can offer a specialist service.

Then, of course there’s the growing competition to contend with. Just recently, estate agents, Knight Frank, announced its intention to offer later life lending advice, and you can guarantee that others will follow.

However, who is in the stronger position to provide these services? From our perspective, it’s the advisory firm but that position of strength might be eroded if you do not act soon, or if you are not able to offer the right proposition.

Many advisory firms will already be seeing clients who might be suitable for later life products but cannot offer this type of advice themselves. In this situation, the opportunity to introduce should not be passed up – for instance, we launched our later life proposition, in order to support our network firm members who were getting these types of enquiries but did not necessarily have the service to offer.

Recent statistics suggest that more and more advisory firms are looking to introduce and this seems like a common-sense approach to take, at least initially. Far better to introduce and not allow these clients to work out the door, go to a competitor, and never return to take up any other services.

Firms also sometimes forget that introducing clients on, does not stop them from beginning to build an advice proposition that can eventually provide this service. Indeed, we are supporting our AR member firms through the process of establishing a later life advice proposition, while at the same time ensuring that existing clients have all the help they need right now.

Client ownership is clearly a very strong pull to do this and we can also highlight the service standards that we believe are necessary in a part of the market which is different to the mainstream one. For instance, this is a sector which needs a very particular set of soft skills, and in our view, a hand-holding on the part of the adviser which is often not required for ‘normal’ residential mortgages.

It’s also our view that too many clients are being taken down the percentage-fee route when it comes to equity release in particular, and we want to ensure that a fixed-fee offering is available which ensures the client does not end up paying thousands of pounds for the ‘privilege’ of advice.

All in all, it is an exciting time for the later life market, but it comes with responsibilities and there is a real need for education and understanding to ensure you offer the best proposition to clients. We are in a position to help advisory firms in this area, and one thing we are not short of is experience, so make sure you take the opportunity to learn from specialists, and hopefully put in place the very strongest of foundations to cement your place in this growing sector.

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