- Worries about inheritance and family opposition are the biggest hurdles to clients deciding to access property wealth
- Around 22% of clients have a good understanding of equity release when they first see an adviser
Advisers are recommending around one in 10 potential equity release clients a year to take out other solutions, research* from national specialist Bower Retirement shows.
Its study found their advisers regularly recommend clients look to other ways of increasing retirement income highlighting the growing focus in the market on best practice as sales expand.
More than £2.15 billion of property wealth was released last year as the market grew by 34% double the rate of the previous year underlining the fast pace of expansion increased competition and lower rates boosted the attraction of equity release.
However Bower’s study found advisers recommended 10% of clients on average should not release property wealth despite there being a lack of options in the mainstream mortgage market. Around 18% of equity release clients have been rejected for mortgages.
Advisers say on average around just 22% of clients are well-informed about equity release when they first see them demonstrating the need for independent and expert advice.
The research shows the main objections from clients when they first consider equity release are concerns about not being able to leave an inheritance and opposition from their family.
Around 62% of advisers say clients are concerned about the impact on potential inheritance while 54% are worried their family will be unhappy. Around half (49%) are concerned about rates.
Average rates are currently around 5.66%** and have fallen by nearly 1% in the past three years while the number of plans available has nearly trebled over the same period.
Andrea Rozario, Chief Corporate Officer at Bower Retirement said: “The equity release market is growing strongly but will never be right for everyone and it is encouraging that advisers regularly recommend clients do not go ahead.
“Most clients are not well-informed about using property wealth before they start the process and need advisers with the skills and capability to explain their options thoroughly.
“Advisers need to fully understand all the alternatives while also being able to handle the emotional and family issues. There is a risk that some advisers are only offering equity release as an add-on to their main business and may not fully understand the options available.”
The research shows around a third of advisers (32%) say clients worry about getting into debt as a result of taking out an equity release plan while just 16% worry about the lack of flexibility in plans, again demonstrating the need for specialist advice.
Bower Retirement is focusing on increased use of technology and service for customers and partners as it focuses on continued growth and recruitment of advisers.
The firm has enhanced its service for the growing retirement planning market with the launch of new online tools. New services include video information for customers and potential new recruits as well as online chat services for customers and a focus on ensuring customers are offered as wide a range of solutions as possible. Videos are hosted on YouTube