Q: I’m a mortgage broker looking to bring in some new business and get into equity release. Does this market have a big future or is it all just talk? Also, what are lenders doing to help brokers get into this space?
A: The latest equity release industry figures show that demand has grown considerably over the last few years.
In fact, despite several providers exiting the market in the aftermath of the global recession, equity release industry recorded its strongest performance since 2009 last year.
The value of the equity release market increased by 17% in 2012 – to £925.7m, up from £788.6m in 2011, with a 10% increase in the number of equity release plans sold. The feedback we receive from both clients and advisers indicates that equity release continues to be a positive solution for many.
As an industry we recognise that the reason equity release is used has changed. Whereas previously equity release was typically used to fund luxury items, now for many it is required to cover day-to-day living costs which they are struggling to cover due to a pension shortfall.
Given that our research into the state of retirement in the UK found that more than a quarter (28%) of over-50s are set to rely solely on the state pension which equates to less than minimum wage, this trend looks set to continue.
As the equity release industry has come on in leaps and bounds, the scope for growth in the equity release market has not gone undetected. In fact, the majority of advisers expect the market to expand and for it to become part of the financial mainstream.
However, many retirees are still unaware as to how they could benefit from unlocking the cash in their homes as it is not often a solution presented to them when discussing their retirement plans.
Helping advisers to confidently discuss all the retirement options available with their clients should go someway to increasing people’s awareness of equity release.
This is one of the reasons LV= will be launching an adviser development programme this year.
In previous years, we have organised equity release bootcamps and masterclasses for advisers and it is clear that the appetite for these types of sessions has grown. There has been such a high demand for our recent sessions that we have had to add more dates, which is a great problem to have.
Our new adviser development programme will be aimed at advisers new to equity release, as well as those who are interested in advising on it.
As with our previous sessions, delegates will be provided with a working insight into the equity release market, and the opportunities and regulatory challenges facing advisers working at the coal-face. However, this three step programme will go further.
The various elements of the course have been devised to support advisers through their ER1 exams and guide them through the practicalities of setting up as an equity release adviser, with workshops focussed on the application process and the necessary marketing and business development considerations.
The retirement landscape has evolved considerably in recent years, so it’s crucial that people seek financial advice to ensure they use the combination of solutions that best suit their needs.
In this post-RDR world, we remain committed to the adviser community and we want to help advisers to demonstrate the value and benefit of good advice.
