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Equity release Equity release
In the previous article I stated that the fact-
find document was just a tool to help, it does
Table 1
not do the adviser’s job for them. Good fact-
finding is reliant on good questioning and
listening skills. The same principle applies to
Client opinion Possible product choice
research and product choice. There are a
Client has an optimistic view of house price growth Lifetime Mortgage
number of tools to help but they all have their
Client has a pessimistic view of house price growth Home Reversion Plan
limitations. They can be a useful starting point
Client has no concerns regarding borrowing or debt Lifetime Mortgage or
but advisers should not forget the following
Interest-only mortgage
circle6
points:
Client has concerns about borrowing and wishes Home Reversion Plan
Not all products may be listed on the research
to avoid debt
circle6
tool used.
Client likes certainty of commitment Home Reversion Plan or fixed-
The lowest interest rate is not automatically
charge Lifetime Mortgage
circle6
the best product for the client.
Client does not like open-ended commitment Home Reversion Plan
The information provided via research tools
Client has positive views on life expectancy Home Reversion Plan
may not be comprehensive.
Client has pessimistic views on life expectancy Lifetime Mortgage
Arguably, this part of the sales process is
Client does not enjoy good health Lifetime Mortgage or Home
where the adviser truly earns their fee – they
Reversion Plan with ‘built in’
have to use their knowledge and expertise to
protection against early death.
make a decision on which product is the most
Client wishes to provide a proportion of their Home Reversion Plan or
appropriate for the client. This decision will
home as an inheritance Lifetime Mortgage with
form the basis of their advice which they must
protected equity feature
justify in writing. It is also (arguably) the
Client wishes to minimise initial commitment Lifetime Mortgage
hardest section of the process as the adviser
Client wishes to maximise initial benefits Home Reversion Plan
must stay objective and not allow their own pre-
Client wishes estate to retain control of the Lifetime Mortgage
conceptions, concerns and attitudes to cloud
property sale on death
their judgement. In this regard, the adviser must
Client wishes to pass over responsibility for the Home Reversion Plan
constantly be guided by the client’s concerns,
property sale on death
attitudes and opinions and they should never
Client wishes to retain Deeds Lifetime Mortgage
forget they are acting as an agent of the client.
Client wishes to retain Ownership Lifetime Mortgage
As with any advice arena the information and
Client may wish to redeem early Lifetime Mortgage
considerations can be complex and are
Client wants certainty of knowing how much of the Home Reversion Plan
dependent on both the client’s needs and often,
property is committed throughout
crucially, their attitudes in a number of areas, for
example, house price inflation, their attitude to in previous articles, it is the ‘soft fact’ develop better products which to some extent
debt, views on their own health and life information that the clients provide that steers overcome some of the generic issues with the
expectancy, their thoughts and wishes regarding the advice, not the hard facts product type. It is important to stay up to date
their longer-term needs, the possibility of In many cases some product groups can on product developments and always read the
moving house, their care provision and whether quickly be discounted as totally unsuitable and product literature before making a final
they wish to provide a legacy. this will obviously help to narrow down the decision.
These areas should have been raised and products to choose from. A useful starting point To demonstrate further that it is the soft facts
discussed in a clear objective way as part of the is to consider the generic advantages and that steer advice decisions, the following two
fact-find process. Where conflicting solutions disadvantages of each product group. Table 1 is a client examples are virtually identical on the
emerge it is vital the client’s views and very general generic guide and is a useful basis of hard fact information. Table 2
requirements are prioritised in order to advise starting point. However, there are always demonstrates the potential differences from an
the most appropriate solution. As I’ve suggested exceptions to the rule as product providers advice viewpoint.
Table 2
Case Study Advice indicators Appropriate Product
Both products provide protection to ensure that the clients can Home Lifetime
continue to live in their homes until they die or move into long-term care. Reversion Plan Mortgage
1 – Gerald & Hannah Longevity – both clients suggest they will live a long time UIcheck UIclose
They wish to avoid debt UIcheck UIclose
They have a conservative view of House Price Inflation UIcheckUIclose
Estate value on death or during their lifetimes if grandchildren UIcheckUIclose
reach appropriate ages
2 – Ralph & Patricia Longevity – estimate five to 10 years UIclose UIcheck
No concerns about borrowing UIcheckUIclose
Positive attitude to House Price Inflation UIcloseUIclose
No family so no specific need to protect estate UIcheck UIclose
July/August 2009 Mortgage Introducer www.mortgageintroducer.com
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