But set-up costs for an in-house service are estimated to be almost £22,000 – compared to £4,500 to set up a referral system to pass leads to a specialist adviser outside of the business.
The analysis forms part of a report by later life lending platform Air, Technical Connection and Ad Lucem – entitled The home belongs in the plan – which includes a roadmap on how to address older borrowers’ needs and helps businesses weigh up the pros and cons of setting up their own service or whether to refer their leads to another firm.
According to Air, a referral set-up will break even after around 3-6 cases, while in-house services will take eight completions to break even.
Later life lending capabilities
According to Air, an in-house service will deliver maximum long-term value, as firms earn advice fees and full commission, but referrals can be “the more pragmatic path”.
Aldermore Insights with Jon Cooper: Edition 9 – Why lending strategy is becoming more central in buy to let
Sponsored by Aldermore
Will Hale (pictured), chief executive of Key Equity Release and Air, said: “Later life lending has moved from a niche consideration to a mainstream planning conversation, and the commercial case for building the capability has never been clearer. But the firms that will see those returns are the ones that start from the right place: genuine client need, transparent explanation of costs and trade-offs, and robust documented understanding before any decision is made.
“When that foundation is in place, advisers aren’t just unlocking a revenue line, they’re deepening relationships across generations in a way that compounds in firm value over time.
“At Air, our goal is to equip advisers with the insight and tools they need to establish productive referral relationships where appropriate and to deliver confident, client-centred advice in a fast-moving environment.”
Tony Wickenden, founder and managing director of Technical Connection, said: “The commercial opportunity here is real, but it only works if the client outcomes are right first. The firms that will benefit most are those that build a repeatable, disciplined process – clear alternatives, plain-English cost explanation, documented understanding – because that’s what protects the client, protects the adviser, and makes the revenue sustainable.”
According to the latest UK Finance figures, the value of later life lending loan advances came to £6.8bn in Q4, a rise of 20.5% compared to the prior year.
