Equity release will be mainstream
Four fifths of advisers new to the equity release market believe equity release will be considered a mainstream financial product in the next few years, research by LV= reveals.
Around 86% of advisers considered equity release to be a significant growth area for their business with 52% of advisers already reporting a recent increase in client interest in Equity release products.
Advisers believed that the main reason the equity release market would grow was because of their clients’ need to cover their pension shortfall.
A quarter believed that the rise in clients who needed to pay off their mortgage and other debts would drive demand for equity release in the coming years and 17% thought that it would be a result of people wanting to fund long term care.
When initially discussing a client’s retirement plan 82% of advisers believed that the equity in a property should be included as part of the process and discussed at the same time as annuity and investment options.
However the findings showed that clients’ views of the market and their concerns about leaving an inheritance for their children remained two of the biggest barriers advisers face when discussing equity release with clients.
A third of advisers admitted that it was their own lack of understanding about the equity release market which had stopped them from writing equity release business.
Vanessa Owen, head of equity release at LV=, said: “What advisers have told us indicates a shift in the view of equity release being a product typically used to fund luxuries such as holidays and conservatories, to one increasingly needed to help cover the day-to-day cost of living.
“With more people reaching retirement with an income that falls short of their expectations, equity release products look set to play an increasingly important role in funding retirement.
“As an industry we have developed in leaps and bounds in recent years but we cannot afford to be complacent as there are clearly still misconceptions about equity release among advisers and clients.”
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