All are equally important and work hand in hand, and in fact all need to be in place if the industry is to achieve £5bn and above.
Taking one at a time, adviser growth is critical as it is the adviser that drives the market, being the instigator of most of the industry marketing activity and engagement with the customer. It is pleasing to see many of the major distributors bringing in new advisers and training them to be the quality equity release advisers of the future. Trainees come from several sources, but with the complexities of retirement advice following the pension reforms, IFAs are a natural choice for recruitment as having an understanding of retirement planning and means-tested benefits means they can quickly adapt. Many IFAs will have mortgage qualifications too, making it a simple task to convert, and remembering that equity release commissions are similar to the earnings from pensions and investments that an IFA is used to, again eases the transition.
Product innovation is also key if we are to grow substantially, and the interest only and lending into retirement issues that we have all heard so much about over the last two years is starting to impact on the market. Products that deal with these issues will undoubtedly give us growth, even just creating flexibility within our existing vanilla product sets. But the real game changer are the hybrid products that will enable people to enter into retirement with an element of repayment and of roll up that can be flexed to suit the customer’s changing needs. It is these products that will help to grow the market, not just through product choice but also through wider adviser engagement.
But to deliver product innovation we need innovative funding lines that do not have the constraints that many current funders have from rigid matching models where an asset has to match a specific liability. Products that can take repayments and therefore create a cash flow will allow some funders to innovate, particularly if the likelihood is that at some point in the future the product will revert to a roll up.
Pure Retirement ran a series of product think tanks across the country in February and the message from the advisers was clear; give us products that deliver flexibility, that meet the needs of the current and changing retirement market and the market will grow. This will result in growing adviser numbers and funders currently circling the market will be encouraged to engage.
