Stuart Wilson is chief executive at Air Group
If I was an outsider looking into the equity release and the later life market, part of me might sometimes wonder what all the fuss is about.
After all, the latest statistics from the Equity Release Council recently revealed total lending figures for 2020 of £3.89bn.
In a broader mortgage market of £230bn of gross lending, plus not far away from £200bn in product transfer activity, you might question as an adviser whether later life lending is a sector I really need to focus on, or indeed delve into.
Now, you might expect me to say this, but the answer is undoubtedly yes, and there are a number of reasons why you should, at the very least, consider your involvement.
Perhaps the major one is around where this market has come from and where it is likely to go.
And from that what other opportunities it will afford you by being involved in it.
Firstly, there’s no doubting it’s a growing market and the demographic and economic fundamentals will only push it further.
In 2015 total equity release lending was £1.61bn, so 2020 was over 50% up on that – and I think we all know that last year was anything but normal.
We fully believe that it is not going to take five years for that figure to double again, and if you add in other later life lending options such as RIOs or more mainstream offerings for older borrowers, you can already begin to see a sizeable amount of lending to aim at.
That, in my opinion, is but the tip of the iceberg.
Take a recent research report from Canada Life which found that over 50% of people are no longer retiring in anything like a traditional manner, and that there are two ‘emerging retirement journeys’ – namely ‘complex families, complex finances’ and ‘late financial bloomers’ who have a far greater need for financial advice not just up to a ‘traditional’ retirement age but beyond this.
We only need look at the raft of issues that many older people have to contend with to see the seeds for a greater financial advice need and also a greater requirement and willingness to utilise their biggest asset in order to find solutions for those issues.
Whether it is topping up pensions, funding long-term care, moving home, helping children, paying off other debts, funding renovations, the list goes on in terms of the reasons why equity release and/or later life lending might be required.
Advisers are already likely to be seeing a growing demand from older customers when it comes to using or refinancing their home, and this is not going to stop, especially as people retire later in life (if at all), people work different jobs, or have bigger and wider commitments to fulfil.
And, of course, being able to provide advice to those at the ‘top’ of the family tree should also afford the adviser access to the rest of the branches, if they can provide a top-quality service to the older borrower.
I certainly hope that, for most advisers viewing the later life sector, the opportunities will already be visible.
But there’s a difference here in spying those likely customers and moving them to become clients.
I’m aware of firms that offer later life and equity release advice, but it could never be said to be a core part of their offering, and there is no targeted marketing of potential clients in those older age brackets.
In that sense, turning an authorisation or qualification into a thriving part of the business might seem difficult, and it’s often a lack of support or resource that stops individual advisers or firms taking those next steps.
This is why we’ve recently launched Air Select – our panel proposition – because after speaking to a large number of Air Mortgage Club members we felt there was a step they could be taking, if they had access to a far wider range of benefits and support, which perhaps have traditionally only been accessible to the more specialist and bigger firms.
That’s not the case with the launch of Air Select, and with three providers on board we can offer not only over 200 products, but reduce the complexity of product selection, deliver enhanced procuration fees, and also give access to Air Sourcing, Air Later Life Academy, and Knowledge Bank, plus marketing support, and much more.
With these enhancements to the service proposition, we believe many more advisers can take a much bigger chunk of the business available, and secure growth as the sector also inevitably grows.
In that sense, there’s a very good reason why we talk a lot about the potential within the later life sector – we want (and need) more advisers more heavily involved in it, because the consumer demand is only going in one direction.
Hopefully, with access to the type of support we can now offer via Air Select, the opportunity can be grasped, and firms can feel that real benefit for many years to come.