The internal dialogue within equity release and later life sector
Stuart Wilson is chief executive at Air Group
Within the equity release and wider later life lending sector there has always been an ‘internal dialogue’ about how to represent the products available and the solutions they can provide.
For a while, the sector appeared not to want to confront the core reasons why homeowners took out an equity release product and what they were using that money for.
If you looked at a lot of the marketing material there was a tendency to ‘promote’ the lifestyle aspect of the product – customers were shown on holiday (cruises being a favourite) or driving brand new cars.
Of course, customers have (and will continue to) use the money released for such purposes, but as time has gone on, I think the sector has become more comfortable not just talking about the more fundamental reasons why equity release is an option but also marketing the products as solutions for these type of issues.
Whether it’s the need to pay off debt, or to renovate a home, or to top-up pension provision, or to fund long-term care, or help family members, etc, we now appear to be a sector much more at ease with itself in that regard.
This, of course, is absolutely vital because looking ahead there is a real sense that equity release/later life lending products are going to be much more in demand in order to help out older homeowners with these types of issues.
Again, customers will continue to use products to fund the ‘nicer things in life’ but I don’t think any of us expects this to form the majority of adviser enquiries.
A recent report from the Equity Release Council and Key entitled, ‘Pension/Property Paradox: revisiting the retirement confidence gap’, highlights some of the key worries and concerns facing homeowners aged over 55 presently.
Perhaps, not surprisingly, in our current COVID-19 pandemic environment, concerns around financial stability, ongoing funding of retirement, choosing when to retire, whether a ‘comfortable retirement’ is possible, have all grown.
We currently have a situation where 90,000 people aged 50 and over were made redundant between June and September this year, and that might be the tip of the iceberg.
The belief that a ‘dream retirement’ is within reach appears to be slipping away for many people, and in particular, women are much more likely to feel pessimistic about their future retirement, and how this might pan out.
Add in concerns about health, paying for care, and the like, and you see the challenge that many people feel they are facing.
Funding retirement for many is challenging, and it’s likely to get even more challenging in the future.
As this research outlines, the challenge is statistically even greater for women because of their likelihood to earn lower salaries, and what this means for their pension provision.
And yet, this research is also revealing, in that women homeowners are less likely than men to consider later life lending products in order to support their retirement standards of living. 23% of women compared to 31% of men.
We can guess at what might be some of the underlying reasons for this, but given the demographics and particularly the statistics around longevity (and therefore retirement) we also need to be quite clear that this is an issue which needs addressing.
The facts of the matter are that, for those fortunate enough to own their own home, the potential to use this as an asset throughout retirement has to be a real consideration as part of a wider later life assessment.
I’ve talked a lot about older homeowners dying throughout cold Winters because they are too scared about heating costs, all the time sitting in a property whose value could be accessed sensibly in order that they might never have this fear again.
That messaging might be somewhat hard hitting but, at a time when many older people, are worried about how they fund themselves up (and into) retirement, we should not be shy about moving our advice discussions into these areas.
Particularly for female clients who – as the stats show – might be more reticent about utilising their home.
We need that broader ‘retirement advice’ service to reach as many potential clients as possible, and we need to ensure those who own property are informed about their options.
We can help with many of those concerns but, as always, we need to ensure our messages reflect the reality.