Speaking on a panel at the Air National Later Life Lending Adviser Conference yesterday, he said the later life market was often compared to the mainstream market. However, he said when clients come to advisers to discuss later life products, the average cycle of advice sometimes takes two years before a product is sold because it is “such an emotive decision”.
“Generally, advisers are working for free over that period. There are not many other professional services out there where someone will work for up to two years with the potential that they won’t get paid at all,” he added.
Flowers said it was about getting the education piece out there as during the mainstream mortgage advice process, people typically knew that they eventually needed to take a product out.
“There’s always that story behind it and sometimes [the later life industry] shies away from that. We need to be more bold to say this is what we’re doing for these customers and these families, and this is why we charge these fees.”
Kay Westgarth, director of sales at Standard Life Home Finance, said advisers did not advise on the basis of how much they would get paid but what was the best solution for a client.
Katy Litt, head of propositions – equity release at Aviva, said Consumer Duty required advisers to remain closer to clients so it was becoming more about the service being provided as a whole and the regular reviews.
She said it could be good to look at the structure of proc fees as there were many aspects to the advice given and ongoing product features, such as drawdowns.
Flowers said the sector was going through a challenging period, so lenders needed to make sure they continued supporting advisers and their businesses with payments.
“There is pent-up demand. I don’t know when we’ll start to see the market come back. As lenders with deeper pockets, we need to support the advisers to make sure when that market returns there are advisers available to support borrowers on this journey,” he added.
Panel moderator Rebecca Perfect said proc fees were typically around three per cent, and asked whether the sector needed to do more to promote the value of the advice given to justify the fee.
Emma Graham, director of business development at Hodge, said the average loan amount taken out for the lender’s later life products had fallen and the differential between the proc fee for a larger loan and a smaller one “isn’t that great at all”.
High net worth individuals
Perfect asked how much more work was involved in high net worth cases, and whether a decency limit should be considered in this area.
Westgarth said it was not about the advice given, but usually the type of property which created the additional work for advisers.
“You may find it’s a more complex property and the underwriting may be more demanding due to the high value, so it goes back to that specialist advice piece,” she added.
She also said family tended to get involved as they saw it as their inheritance, so there were typically more legals required.
