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House of The Rising Sum – exploring equity release opportunities

Equity release customers increasingly value the ability to make interest payments and capital repayments as products develop, new adviser research from independent analysts AKG shows.
Nearly two out of three advisers (63%) say clients most value the ability to make capital repayments while 58% say clients are interested in being able to make interest payments.
The flexibility from drawdown products which enable customers to manage their property wealth is rated the most important by 68% of advisers while 72% say the ‘no negative equity guarantee’ on plans is the most attractive.

AKG’s industry research paper, sponsored by lender more2life, ‘House of the rising sum – exploring equity release opportunities’ predicts steady growth for equity release but highlighted lingering concerns about risk management and a need to support vulnerable customers.
More than half (55%) of advisers expect their equity release business to grow over the next three years with 12% predicting substantial growth while 43% expect modest growth. Nearly half (47%) of advisers say clients are receptive to how equity release can help them.

Interest rates and product pricing are the main reason for selecting lenders – 71% of advisers pick on price – way ahead of other criteria. Around 54% select lenders on range of solutions while 38% pick on LTVs and financial strength and 32% on innovation.

However, interviews with advisers by AKG highlighted risk management concerns and a need to develop advice and processes to provide comfort for advice firms in the market.

Advisers would like to see more emphasis on educational efforts by providers and established best practice on compliance and sales processes as well as more consideration of issues around vulnerability and duress.
Matt Ward, Communications Director at AKG, said: “The purpose of the paper is to provide practical and educational output which encourages further discussion and debate about the evolving role of equity release in the UK retirement and later life markets.

“The research reveals positive signs and shows us that advisers see the ability to offer a wider range of services to clients, being able to help clients with issues they could not help with previously and the provision of an additional revenue stream for the adviser business as key primary benefits of offering equity release.
“A steady growth picture is predicted for equity release business, but the twin hurdles of historical perception of equity release and compliance concerns remain a deterrent to engagement for some advisers. All parties need to continue how best to consider and address potential issues around client vulnerability and duress.”

Research for the paper was carried out via an online survey with advisers and also through a series of telephone interviews. Insight from both research exercises features throughout the paper.

Dave Harris, CEO at more2life, said: “We were delighted to sponsor this extremely valuable paper which highlights not only where the market needs to innovate and develop but also how we need to clearly communicate our offerings and the support that we already provide for the adviser community. With increasing numbers of consumers turning to advisers for help as they look to take a holistic look at their retirement assets and make sustainable choices around later life, we clearly need to bridge this education gap in order to grow the market.”

The paper is primarily targeted at financial advisers, financial planners and paraplanners but content and findings will be equally relevant for product providers, distributers and other equity release stakeholders.
Key sections of the equity release paper cover:
  • historical perception;
  • what’s in it for advisers;
  • positioning and demand;
  • perception, drivers and engagement;
  • education, qualifications and standards;
  • the advice process;
  • market landscape and requirements;
  • future prospects.
The paper also includes input/comments from other pertinent equity release market stakeholders, including The Society of Later Life Advisers (SOLLA), The London Institute of Banking & Finance (LIBF), The Society of Mortgage Professionals (SMP) and The Equity Release Council (ERC).
Research paper available to download at:
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