Donna Bathgate, chief operating officer at the Equity Release Council believes there has never been a more exciting time in the market but says silos across the financial industry must be broken down.
Matt Sutton, managing director of Emerald Finance says consumer understanding is still limited and it’s advisers’ duty to provide education.
Stuart Wilson, channel marketing director at more 2 life warns regulator concerns such as mental capacity and vulnerable clients need to be a key consideration.
The boundaries that once existed between equity release and other later life lending options are beginning to be dismantled.
This is good for the consumer who we know does not differentiate to the same degree of granularity as we do in the industry.
Increased competition and rates at record lows are also good indicators of an evolving market, but the story is really only just beginning.
Despite such growth, the sector must play its role in helping to reshape the mindset held towards property as an asset.
In the not too distant future, wealth accumulated throughout a lifetime will no longer be left untouched for loved ones.
Rather, as we live longer, we will be required to provide income in later life.
As such, it is imperative that when planning for those later years and eventual retirement, we must weigh up all of our options – ranging from pension income, assets, and savings to housing wealth.
Moreover, the market must work towards even greater collaboration with other specialisms across the financial landscape.
We must strive to break down the silos, whilst ensuring we keep a firm grip on standards and best practice, helping to ensure the best possible outcomes for consumers.
A revamped approach to advising in the later-life market, teamed with accessible and jargon-free information, will also ensure consumers get the most suitable solution for their needs.
With real momentum behind the sector as we approach 2018, there has never been a more exciting time to be part of the market.
It is time for the once niche equity release sector to take the next step as it enters and embeds as a mainstream segment of the financial services market.
For many, retirement is a time of prudent spending, a far stretch from the dreamy retirement once imagined.
Wealth tied up in the home can seem inaccessible.
For some there is the worry of losing equity through inheritance tax.
Solutions are available for both and as advisers it’s our duty to explain how these products have developed and the diverse features offered.
Despite increased television advertising and wider product adoption, public understanding is still limited with many unaware the products exist.
A portion of clients that are aware are still haunted by the poor reputation of products that have ceased to exist since regulation was applied.
For clients the opportunities are vast. Incredibly low rates at under 4% fixed for their lifetime. Pay the interest or let it roll up on top of the original debt.
Indeed, rates are so low that it will take circa 17 years to double the debt on a roll up basis – going on the above rates.
Drawdown features enable clients to take funds as they are needed, with many schemes allowing overpayments of up to 10% per annum.
Client education is key to both the growth of this product area and in solving the financial challenges this generation is facing, and will continue to face.
This should be part of later life planning for every client and offers opportunities for advisers to create new income streams within their own business or create mutually rewarding relationships with specialists in this sector.
As another record-breaking year for equity release draws to a close, the sixth consecutive year of double-digit growth, it would be easy to assume that the good times will just keep rolling.
Indeed, the forward indicators are very positive.
There is huge and growing consumer demand for retirement lending, driven by a number of external factors including interest only mortgage debt, pension reforms, an ageing population and an increasingly ‘asset rich/cash poor’ generation of retirees.
However, at the same time it would be wise for advisers to be tuned in to the challenges this industry still faces if it is to continue on its growth curve.
As the market increases it becomes more important to ensure customer outcomes are not lost in the frenzy to take advantage of the fastest growing mortgage finance sector in the UK.
Important issues such as health, concerns about inheritance and future downsizing plans can be overlooked and missed out of the discussion with clients in the rush to get the best deal at the lowest rate.
There are also other issues of potential concern to the regulator too, such as mental capacity and its assessment with vulnerable clients is an area of financial planning that later life advisers need to be taking into account.
This market requires a high level of specialist advice and knowledge, and rightly so.
As the market grows and more advisers are attracted from other markets towards equity release, it is vital that we maintain the high standards that have been developed and achieved over the past 25 years.