the power hour
accumulated wealth and ignore the biggest asset they own. Andrea Rozario: SHIP engages with stakeholders across the board on this and recently we spoke to IFAs who don’t usually do equity release. They admitted that they don’t even ask the question. It could well be that it should be a mandatory part of the fact finding process that their largest asset – their property – is taken into consideration. Even if the adviser is not qualified to discuss equity release it can then be flagged as part of a potential solution and the client could be referred to a specialist. Simon Little: That’s true but the consumer will drive this market and the industry has to engage with them. We’re not doing that at the moment. We put this in a little pocket called equity release but it should be part of “at retirement”. Unless we as an industry can talk about what equity release can actually do for clients we can’t expect consumers to take hold of that message. Equally, top end IFAs still see equity release as a dirty product they don’t want to get involved in. But they’re misleading their clients by not discussing it. The message is this is about retirement solutions not hocking your house. DM: To an extent the regulator has created that cocoon for equity release
38 mortgage introducer MARCH 2011
“IT COULD WELL BE THAT IT SHOULD BE A MANDATORY PART OF THE FACT FINDING PROCESS THAT [A CLIENT’S] LARGEST ASSET – THEIR PROPERTY – IS TAKEN INTO CONSIDERATION. EVEN IF THE ADVISER IS NOT QUALIFIED TO DISCUSS EQUITY RELEASE IT CAN THEN BE FLAGGED AS PART OF A POTENTIAL SOLUTION AND THE CLIENT COULD BE REFERRED TO A SPECIALIST.”
because the legalities around it separate it from anything else.
is regulation hampering the market? Claire Barker: I don’t think there’s a huge regulatory barrier stopping people getting into equity release and I think consumers quite like the safety nets in place. Whether we go too far with regulation though remains to be seen and product innovations will bear that out in the future. But certainly from the
point of view of the consumer there’s demand out there. From where I sit as a solicitor, clients want the product but can struggle to find advisers to give them access to it. PW: There is huge latent demand but no active demand. To use the analogy of the growth of protection providers in the 80s, firms had one-to-one discussions with consumers, disturbed them and then reassured them with a solution. That’s where we’re lacking at the moment. There aren’t enough touch points between the industry and the consumer to provide that reassurance. After all, it’s their house we’re talking about. CB: There’s more we could do to tell the good news stories of people who’ve used equity release. The people who didn’t want to move, didn’t have to move, got a better income and life got better. How we do that is harder.
so hoW do We get consumers to engage? SW: People don’t buy financial products on technical facts that our regulator insists they must in this day and age. Going back to Peter’s point about the protection market – in those days we had huge direct sales forces who were very well trained at getting product messages across despite selling inferior products.
One of the biggest gaps we have now is the ability of distributers to market, sell and promote their products in their local communities. Particularly for intermediaries with a mortgage background – we have an industry of people who grew up selling commoditised products. We need to get back to this with intermediaries. The old Chinese proverb springs to mind: “Man who stand on hill with mouth hanging open wait long time for roast duck to fly in.” And therein lies a lot of intermediaries’ problems.
are the products the problem? VO: Equity release should be a needs based purchase where someone needs
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