This week, Key launched a new service for mainstream advisers, designed to make it easier to support those with later life needs.
And brokers argued that having some sort of plan in place for assisting such clients is becoming increasingly important, whether that means taking on the case themselves or working with a referral partner.
The need for collaboration
Later life lending is a specialised sector, so should be let to professionals that only operate in that area, argued Martin Stewart, director of London Money.
He cautioned that there was a “huge potential mis-selling risk with these products”, particularly given family members may have been banking on an inheritance from the family home, only to realise a lot of the money has already gone.
He added: “As a firm, we prefer to send any equity release clients to someone who thoroughly understands the issue, can communicate a complicated product in a very uncomplicated way and is solvent enough to advise a borrower against taking action if that is the best thing for them to do.”
Darryl Dhoffer, adviser at The Mortgage Expert, said that collaborating with qualified equity release specialists can ensure clients “receive appropriate advice”.
He urged brokers considering their later life options to make sure they do their research and understand the regulations in place. If necessary, it may be better to partner with specialists rather than handle the advice themselves.
Scott Taylor-Barr, principal adviser at Barnsdale Financial Management, said he has always worked with specialists so that he can refer clients as and when suitable.
“That works for me, as I don’t see enough of this type of client to maintain the product knowledge and lending contacts to effectively advise in that area myself, and it allows me to concentrate my efforts in the areas where I can deliver the most value to my clients.”
Taylor-Barr noted that this is the same process he uses for areas like commercial lending, pensions and investment enquiries.
Boosting your own knowledge
Robert Timm, managing director of Sunland Mortgages, said he has a referral partner that he has used for years with traditional equity release clients, confident that they will receive the same level of service.
However, he said that there has been an increase in later life clients who don’t fit into this box, so he has worked at building his knowledge so that he can be more confident in supporting them himself.
He continued: “Generally, the time invested on these cases is greater than a typical residential or buy-to-let (BTL) mortgage, but the reward in terms of proc fees and also client satisfaction is, in my opinion, worth it, but only do this if you have confidence in the process and lenders.”
Rowan Frayling, managing director of J Finance, said that his firm had decided to become an expert in this field a few years ago, and so now works with a host of advisers when its clients have later life needs.
He explained: “These advisers often spot an opportunity where perhaps they cannot help with a conventional mortgage and refer the client to us for advice; we specialise in equity release, retirement interest-only (RIO) and more, and can often find solutions for these clients.”
Putting plans in place
Simon Bridgland, director of Release Freedom, said that he would only refer to another broker if the needs of the client were outside his own specialism, such as home reversion schemes.
He explained: “My need for referral is greatly reduced as I opted to complete further study and gain valuable experience in the later life sector. This means that more of my time can be spent on cases of a more complex nature or simply where more time is needed to guide a client.”
Bridgland emphasised that brokers need to have “robust support plans” in place for dealing with later life clients, particularly with the introduction of Consumer Duty.
“You only get one chance, so it must be handled carefully. Brokers should form solid relationships with later life advisers they can reach on tap,” he added.
Steven Morris, advising director at Advantage Financial Solutions, said that all options should be considered for later life clients, whether it is handled in house or partly outsourced to specialists.
He warned that the market’s attitude towards ‘order taking’ presented a problem. “How many clients ended up with equity release just because they spoke to an equity release adviser initially? Or a RIO mortgage because their adviser didn’t do equity release? I dread to think.”
