Stuart Wilson is CEO of Air Group
Welcome to a New Year and indeed a new decade.
As the ‘roaring twenties’ begin, I can’t help think of the George Michael song, ‘Waiting for the Day’ – written to herald in the 1990s but with lyrics as pertinent today as they were back then:
“Now everybody’s talking about this new decade,
“Like you say the magic numbers,
“Then just say goodbye to the stupid mistakes you made.
“Oh, my memory serves me far too well.”
Given we have just been through a General Election campaign where the main protagonists seemed to suggest they’d had nothing to do with the past nine years and that they were able to wave a proverbial magic wand to make things right in the future, I think George was particularly prescient 30 years ago about what the next decade might look like for us.
Which all sounds somewhat downbeat, and politically I suppose it is, however looking at our industry at a more micro-level there is clearly a lot to be positive about, albeit with the caveat that, when it comes to the later life industry and equity release in particular, I suspect we will be in the spotlight in the months and years ahead like we have never been before.
Indeed, at the tail end of last year it was reported in various circles that the FCA has been engaging with the equity release market to ‘understand the market’ better.
This has been described by the regulator itself as ‘exploratory work to understand lending into later life’ including both secured and unsecured lending products.
Some media outlets have since suggested that advisers are somehow going to be in the firing line because of the commission payable on equity release products, notably forgetting the stringent rules and regulations which police our sector, the extra qualifications required by all active advisers, the authorisations necessary, the legal safeguards, and indeed the compliance this type of advice will have to go through.
We are nothing if not thorough in the equity release space, although still having to carry the baggage of a market from 30 years ago and which is so far removed from today’s sector that you’d think it was from another planet.
That won’t however stop the nay-sayers attacking the sector even if the solutions equity release products can deliver to today’s later life customer are absolutely valid and indeed, necessary.
In a very true sense we are always fighting that past, which probably seems somewhat ironic to the existing generation of equity release advisers who would probably have been nowhere near the sector back in the late 1980s/early 1990s. Them’s the breaks I suppose.
However looking ahead the prognosis for the equity release patient, so to speak, looks very good indeed. In fact, we might even suggest it’s in rude health, and when you add in the other ‘patients’ – notably RIO mortgages and more mainstream mortgages aimed at those in later life I can honestly see a very long life ahead of it.
Certainly from an adviser perspective, we’ve seen a considerable increase in interest in later life advice provision, fuelled I suspect by a greater demand from this client demographic.
Let’s make no bones about it, the average homeowner might view the sector as somewhat complicated and the chances are that their needs, their circumstances, their wants and ambitions for the future, require professional advice perhaps more than any other individual.
Add in the other later life issues notably pension provision, access to benefits, longevity, long-term care, living standards, and you can understand why the advice profession will be the first port of call for many of those individuals who want clarity on their finances and, if appropriate, access to the equity in their home, or the ability to keep on lending into retirement.
One point does need to be made here though and that is we should not be looking at the later life client purely in isolation in terms of borrowing requirements or the ability to access equity.
As mentioned above, there are a number of consequences to come from the provision of advice in this area, and there are also a large number of later life client needs that should be covered. Indeed, clients will want to be reassured that their advice needs are being looked at in the round.
Overall, however, we should all look positively at the future of later life advice and the ability of advisers to deliver it. Of course, you will need resources, backing, support, the requisite technology, etc. But these are all readily available if you are making that commitment to later life, or you would like to in the future.
This is a growth opportunity and it’s one that should be grasped in 2020.