According to Rowntree, the current landscape for late life financial products is too fractured to satisfy the growing borrowing needs of late life consumers.
“[As a late life borrower], I need advice around pensions, care costs, on how long am I going to live, how will I fund that, I’ve got children that are coming out with students debts, that can’t get on the housing ladder, and have to release some money to pay for that. I can separate pensions advice, I can get separate mortgage advice, does my mortgage advice also include lifetime advice? It becomes very very difficult and there’s not one place to get this advice.
“To consumers, it must feel at times a bit like the classic game, Guess Who? – who holds the right responsibilities? Are they chartered, are they level four, are they cmat?”
“Where I see the real opportunity for all of us as lenders, as for brokers and advisers is to start thinking more holistically about how we can support our consumers,” he continued.
“From a lender’s point of view, those who have got a guaranteed income are surely a better bet than those – like ourselves — who have unguaranteed incomes.”
Rowntree’s call for a “one-stop-shop” comes as the Financial Conduct Authority (FCA) called on the government this September to act on the issue of long-term care advice and products.
The FCA said that poor signposting and complex lending criteria could prevent older consumers from accessing a mortgage: “Firms may be unnecessarily limiting themselves, and older borrowers, by having rigid policies or systems and controls that are unable to consider individual circumstances, potentially resulting in unintended exclusion of credit-worthy consumers in the target market.”
As older consumers are becoming more comfortable about late life borrowing, Rowntree said that the industry needs to adapt in order to offer the products and advice these consumers require.
“Attitudes are changing towards borrowing into retirement, there’s no shadow of a doubt about that,” Rowntree said.
“The actual event of retirement is becoming fictional. So we don’t have the typical cradle-to-grave employer, and retire after a period of time – that’s been gone [for] a long time,” he continued, “More so we’re seeing retirement [being] much more of a process — over sort of ten years.”
The way people retire and their attitudes toward that retirement are changing for a number of reasons, says Rowntree. Some work into retirement age out of necessity, some keep working because “there’s only so much golf, gardening and cruises” they want.
Moreover, on top of lifestyle desires such as home improvement or travel, late life borrowing is increasingly seen as an avenue for helping family – especially supporting children in getting onto the property ladder.
“I might be income poor, but I’ve got this big asset – how do I utilise that to do all the things I want to do in life?”
“Legacy is becoming a luxury — to leave a legacy to your children when you pass away and all of your inheritance go to them. Some are lucky enough to still do that. But the attitudes are changing away from that.”
Indeed, the bank of Mum and Dad is an increasing source of support for aspiring homeowners in need of help for their deposits. In 2015, parental support came to approximately £5 billion, and Rowntree says that figure will increase to around £6 billion this year.
Embracing innovation in technology could be the way forward, Rowntree suggested – but as tools to support, and not supplant, human operators.
“I don’t think that we’re anywhere near the position where we’ll have roboadvice come to the market and do even basic advice well – never mind moving into a more holistic space,” argued Rowntree.
“But what it could absolutely do is start to do some of the heavily lifting and so the adviser could bring together – whether it’s through open banking or bringing regulations in line to give that holistic advice.”
What a tech-enabled one-stop-shop could do is provide “an opportunity to do that where it’s cost effective to the consumer, easy to regulate for those providing the advice, and easy to understand for the regulator to keep a broad view over the top,” Rowntree said.
“Not easy, but certainly an opportunity for all of us to take forward,” he added.