Equity release set to become mainstream product
Research carried out by retirement specialist LV= reveals 80% of advisers new to the equity release market believe equity release will be considered a mainstream financial product in the next few years.
The majority of advisers (86%) consider equity release to be a significant future growth area for their business, with over half (52%) of advisers already reporting a recent increase in client interest in equity release products.
Advisers believe that the main reason (67%) the equity release market will grow is because of their clients’ need to cover their pension shortfall. Nearly a quarter (23%) believe that the rise in clients who need to pay off their mortgage and other debts will drive demand for equity release in the coming years, and 17% think that it will be a result of people wanting to fund long term care.
When initially discussing a client’s retirement plan, 82% of advisers believe that the equity in a property should be included as part of this process, and discussed at the same time as annuity and investment options. However, the findings show that clients’ outdated view of the market and their concerns about leaving an inheritance for their children remain two of the biggest barriers advisers face when discussing equity release with clients.
Vanessa Owen, LV= head of equity release, 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.
“For many clients, their property is their single greatest asset so it is encouraging that advisers believe the capital tied up in property should be discussed at outset when financially planning for retirement, rather than after people have retired.”