The discussion, which took place at The Ivy in Manchester, kicked-off by asking if brokers were expecting business to be brisk this autumn?
“Macro conditions suggest the market should grow, but the time between enquiry and completion is lengthening,” replied one broker.
Another agreed that an uplift was likely in the medium- to longer-term: “All of the structural drivers are there. People are under saved into their pensions, cost of retirement is increasing and the only asset they have is their house. Everything points to the market bouncing back.”
However, brokers aired concerns that the quality of customer-facing information available on later life lending might be causing confusion.
“Some customers are not sure where to go to get the best product or the best advice. We need as an industry to help signpost those customers,” said one adviser.
Brokers voiced thoughts on a potential over-abundance of funding in equity release as well as about the quality of later life financial advice generally.
“Our market is overfunded,” said one broker, adding “it’s time to ask lenders ‘is there much differential in the products you offer?’ Not really.”
Another asked if sub-standard advice might be damaging prospects. “There’s a tranche of customers in the UK who need good quality advice around their retirement generally — not equity release necessarily, but traditional retirement planners don’t think about equity release,” they said.
The quality of marketing communications by lenders was also raised.
“We need more, bigger brands to do some of that heavy lifting in terms of raising awareness and to change the market from niche specialist into something mainstream,” said one broker.
“I don’t know what messages are going out to customers but rates are coming down week by week. . . is there even advice going out to say ‘you don’t need to jump in’,” asked another participant.
Diligent versus lazy advisers
One broker suggested that quality advice was available depending where customers go: “We ask our advisers to be more sophisticated in the fact find process and to really understand the customer’s needs and discuss the other benefits that providers offer. A lazy adviser might go straight to the lowest rate, but actually there are products out there now that give many more features,” they said.
Another added: “What has always been drilled into me as an adviser, ‘what’s the need?’ You establish the amount and then it rules out a lot of the providers that might be offering a larger reserve than what the client necessarily needs.”
Another of the brokers went further to say that the equity release products on the market would benefit from a refresh that was better at incorporating potential customers’ points of view.
“A lot of these products have been designed first and foremost with the funder in mind,” the broker said. They continued: “It’s about creating an asset for the funder that performs as a hedge for their annuity book or against their pension book. It’s not built with a customer in mind.”
The attendees were then asked whether they felt the proposed overhaul of mortgage advice qualifications to support later life lending might help to improve the quality of advice?
“It’s more about what happens after the exams and what support is there,” said one broker. “Is someone who passed the exams five or 10 years ago still giving the best advice today?”
Another argued that the sector’s recruitment and training processes were generally high quality, particularly when compared to other areas of financial advice.
“I haven’t see other advisory businesses that spend as much time recruiting the right people, investing in training and ensuring checks and balances are in place,” they said.
One broker added: “The great majority of the time the advice we deliver is fantastic. When you look across at the mainstream mortgage market, actually the quality of advice we give in equity release is brilliant.”
The next step, as a new generation matures into the potential equity release customer space, is to improve the quality of information and customer engagement online.
“That is next and it’s useful to think more broadly about how we generate customer enquiries,” said one participant.
Proc fees challenge
The session concluded on the thorny issue of broker fees and how these could be justified at their current levels.
One attendee noted: “At the moment, the cost to the customer to access these products is high. Rates are good, though funders are still making very good margins.
“But actually, most of us are still charging three or three-and-a-half per cent procuration fees. There’s a lot of fat in there and we really need to challenge ourselves how we strip that out.”
The conversation ended on something of a warning note: “If we don’t self-regulate, the regulator will come in and do that for us. Much like in the mortgage market where it’s capped and the regulator sets the fee.”
Aaron Conlon, Fluent Lifetime
Chris South, The Right Equity Release
Will Hale, Key
Andrew Kerry, Step Change
Andrew Morris, Age Partnership
Shaun Conlon, Fluent Lifetime
Martin Reilly, The Right Equity Release
Sam Rouissi, Just Compare Retirement
Matt Stirland, Age Partnership
Jorgi Bradley, Just Compare Retirement
Dennis Kreijns, Just Compare Retirement
Owain Thomas (Chairman)