What do equity release customers really want from the later life lending product?
New adviser research from independent analysts AKG shows that equity release customers increasingly value the ability to make interest payments and capital repayments as products develop.
According to the study, nearly two out of three advisers say clients most value the ability to make capital repayments.
In contrast, 58% say clients are interested in being able to make interest payments.
The flexibility from drawdown products which enable customers to manage their property wealth is rated the most important by 68% of advisers, while 72% say the ‘no negative equity guarantee’ on plans is the most attractive.
AKG’s industry research paper, sponsored by lender more2life, ‘House of the rising sum – exploring equity release opportunities’, predicts steady growth for the equity release sector.
This, however, brings to light growing concerns about risk management and a need to support vulnerable customers.
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Consequently, more than half of advisers expect their equity release business to grow over the next three years, with 12% predicting substantial growth, while 43% expect modest growth.
The main reason why advisers select lenders is determined by interest rates and product pricing. This criteria is evident as 71% of advisers look at price above other criteria.
54% of equity release advisers select lenders on their range of solutions, while 38% pick on LTVs and financial strength, and 32% on innovation.
Some key issues advisers would like to see more emphasis on are educational efforts by providers, the need to establish best practice on compliance and sales processes as well as more consideration of issues around vulnerability and duress.
Matt Ward, Communications Director at AKG, said:
The purpose of the paper is to provide practical and educational output which encourages further discussion and debate about the evolving role of equity release in the UK retirement and later life markets.
The research reveals positive signs and shows us that advisers see the ability to offer a wider range of services to clients, being able to help clients with issues they could not help with previously and the provision of an additional revenue stream for the adviser business as key primary benefits of offering equity release.
A steady growth picture is predicted for equity release business, but the twin hurdles of historical perception of equity release and compliance concerns remain a deterrent to engagement for some advisers. All parties need to consider how best to continue and address potential issues around client vulnerability and duress.
The study collected data for the paper by conducting an online survey of advisers and also through a series of telephone interviews.
Insight from both research exercises features throughout the paper.
Dave Harris, CEO at more2life, said:
We were delighted to sponsor this extremely valuable paper which highlights not only where the market needs to innovate and develop but also how we need to clearly communicate our offerings and the support that we already provide for the adviser community.
With increasing numbers of consumers turning to advisers for help as they look to take a holistic look at their retirement assets and make sustainable choices around later life, we clearly need to bridge this education gap in order to grow the market.
The information contained in this blog post does not constitute advice or recommendations. You should seek independent financial advice before acting on any information on this website.
