However, sometimes we can be guilty of putting those divides in place ourselves.
The client has little control over these divides, and while advisers go out of their way to ensure the correct advice and recommendations are delivered, it does not make for a smooth process.
It means there can often be a sense that something has been lost and the client could have had a much better experience.
Looking at the later life market, I can’t help feel that the introduction of Retirement Interest-Only (RIO) products, the categorisation of them within the residential/mainstream mortgage sphere, and some of the requirements – or perhaps I should say lack of requirements – from certain lenders has delivered a skew-whiff marketplace.
Divide in the RIO market
While I of course welcome more lenders bringing RIOs to market, and the broadening of the product choice for later life borrowers, there does seem to be something fundamentally out of kilter with how the market should be operating.
The problem is that we have a disconnect here, a divide.
It comes down to where these products sit, adviser qualifications and authorisation, who offers what, and where the client should go to ensure they have all the later life lending options available.
Depending where they get their advice, clients may find they do not have full access and might end up with a product based on the adviser’s authorisation rather than their own needs.
That cannot be right and, as was voiced by many trade body representatives at the Financial Services Expo in London, there needs to a greater collaboration between both RIO, equity release, lending into retirement and other parts of the later life sector, so such outcomes do not become the norm. Down that particular path, trouble doth lie.
RIO not a backdoor into later life
One suspects the industry is going to have to deliver a solution here because while the regulator might reconsider its stance, these decisions often take time.
For what it’s worth, many lenders offering RIOs are leading the way – only allowing advisers who have mainstream and equity release authorisations or qualifications to write such business.
In this way, we can help ensure that all options are on the table for the client, and one might suggest this becomes an official industry norm, with those operating outside it being a very tiny minority.
Operating in such a way goes a long way to bridging the divide but it will also require advisers to ensure they have the skills, experience and regulatory bits of paper to be able to operate in both zones.
More advisers are needed in the later life sector, but we should not consider the provision of RIO products as an opportunity to step over the threshold of what might be perceived as a backdoor in.