In his latest blog for IFA Magazine, Ahmed Bawa (pictured), CEO, Rosemount Financial Solutions (IFA), stresses why, with an ageing population and growing client demand for later life lending solutions, advisers must act now to build the skills and expertise needed to guide older clients effectively. He also warns that the risks of not doing so would mean falling behind as both client needs and regulatory expectations evolve.
As a nation, we are getting older. The number of people aged over 50 in England has grown by 47% in the last 40 years according to analysis from the Centre for Ageing Better while the number of over-65s has jumped by more than half.
It’s a trend that’s only likely to continue, meaning that advisers should prepare themselves for seeing greater numbers of clients with at least one eye on retirement and their later years.
One area advisers will need to think about carefully is later life lending. The level of housing equity owned by older people is little short of astonishing, with Savills suggesting the over-65s hold more than £2.7 trillion in equity.
Yet at the same time, rising costs have put pensions under strain. We have a generation of older people today who are asset rich but cash poor, and interested in unlocking some of that property wealth whether to supplement their own pension savings or to boost the financial prospects of their loved ones.
The equity release industry has risen to the challenge too. The products on offer now are far more flexible and adaptable than was the norm even just a few years ago, allowing homeowners to unlock larger loan-to-values and reduce the eventual costs by committing to making interest payments over a set term.
This is an area where there is clear – and growing – client need, and an evolving range of product options, making it all the more important for advisers to act now and incorporate it into their range of services.
Building skills
We recently ran an equity release masterclass with Legal & General for our advisers who wanted to add equity release to their skillset. The day included interactive tasks and exercises aimed at boosting understanding of the sector, and putting the advisers on the front foot for passing their Certificate in Regulated Equity Release.
The feedback was incredibly positive, highlighting how useful and informative the sessions had been, but what was most encouraging for me was the direct result of those sessions. Of the eight attendees, six have passed their exam since attending, while two more have exam dates booked in.
One attendee actually suggested they would have struggled to pass if it hadn’t been for the course, and the helpful revision guides provided by the tutor.
It’s a good example of the practical support that networks and providers can deliver. It’s not enough to talk about helping advisers to become more efficient, or to broaden their services; we need to actually put that support into practice.
After all, if advisers have a broader knowledge base and range of skills, then they are better able to provide the guidance needed, no matter the circumstances or unique challenges presented by an individual client.
Meeting regulator expectations
It’s also worth noting how keenly the FCA is looking at equity release advice at the moment. In its latest discussion paper, the regulator warned that the current quality of advice is inconsistent, and too often focused on the initial mortgage needs rather than taking into account a wider financial plan.
The regulator also wants views from the sector on whether equity release qualifications should be required more broadly, becoming the standard rather than the exception.
As a network, we obviously believe in the value of these qualifications and the importance of providing clients with a comprehensive service. But with the regulator’s gaze upon the industry too, now is clearly an opportune moment for advisers to act and arm themselves with the skills they need.
Taking later life lending seriously
Later life lending is not going anywhere. Given the nature of the UK’s demographics, and the challenges people face in building traditional pension pots robust enough to cover their ambitions in retirement, we are only likely to see growing interest in equity release products.
Throw in the direction of travel with regulation, and it’s evident that advisers who don’t have a plan in place for supporting older clients need one, and fast.
As an industry, we need to show that we are taking specialist later life lending seriously, and for networks that means helping advisers secure the qualifications and expertise they need in order to deliver for older clients.
