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Increased complexity means greater care to get the right recommendation – Wilson

by: Stuart Wilson, CEO at Air Group
  • 11/10/2019
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Increased complexity means greater care to get the right recommendation – Wilson
Some commentators looking at the latest figures from the Equity Release Council might suggest the sector has ‘topped-out’, given the slight fall in lending between the second half of last year, and the first half of this.


However, as history will show, the second half of any year tends to see more equity release activity and lending than the first six months, and I would be very surprised if we were not once again pushing close to £4bn for the entire 12 months by the end of 2019.

However, the fact that there has been a slight dip cannot be disputed – lending was down from £2.1bn in H2 2018 to £1.85 bn in H1 2019 – but if you compare the figures with the same period in 2018, we’re actually slightly up.

There are a huge number of positives to report in the sector, not least the significant growth in product choice – up from 126 to 287 over the same period – and we’re seeing average rates for products below five per cent for the first time.


Increasing product offerings

Product choice is particularly pleasing, not just because of the numbers, but also the criteria changes and the specific targeting of certain borrower types and needs.

We are all aware of the ability to pay interest, but there have been other specific products which cover off, for example, the desire to downsize later on or to provide inheritance guarantees.

That move away from a one-size-fits-all product mentality is absolutely vital.

As we’ve seen with the mainstream mortgage market there is a growing complexity in terms of borrowers’ situations, what they wish to use equity release for, and how they want to act in the future, especially with regards to drawdown and leaving an inheritance.

The message for advisers however is one around product knowledge and understanding, and being fully aware of all those options that might be available to the client.

And by this, I mean not just in the equity release space, because clearly we’ve seen more lenders active in later life lending, be that RIO or mortgages for older borrowers.


Covering all bases

Without that 360-degree view of all product choices, you are likely to leave your client at a serious disadvantage, and the chances of you making the wrong recommendation are greatly enhanced.

Let’s not forget that, when it comes to later-life borrowers, these are not just decisions predicated on a need for cash, because advisers also need to take into account pension and other asset incomes.

And not forgetting the situation when it comes to a client’s benefits, their savings, their health, their family situation, their future plans, and everything else that needs to be fed into your advice and recommendation.

The complexity of a ‘typical’ later life client’s situation has increased, along with product choice going up.

So with the need for full knowledge comes a requirement to utilise quality technology and sourcing systems, a commitment to improving qualifications, training and development, and ensuring you have the soft skills required in a market which can have a greater share of potentially vulnerable clients.


A collaborative effort

These are not small asks of any adviser or firm, and you may need greater levels of support than you have previously needed.

Use all the resources and the propositions out there that are specialists themselves, dedicated to improving the lot of the adviser and their later life clients.

You really can’t do this alone – and the fortunate thing is, that in this current market, you don’t need to.

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