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Third of IFAs see increase in equity release for retirement income
84% of IFAs expect to see an increase in business over the next three months
The fourth Equity Release IFA Confidence Index from Hodge Lifetime, the UK’s longest established equity release provider, has revealed that 32% of IFAs saw an increase in clients using equity release to supplement retirement income over the last three months. 82% of IFAs surveyed stated that up to ten per cent of their equity release business came from clients using the product in this manner and 18% indicated that this percentage was far greater.
As older homeowners turn to equity release in this way, the number of IFAs expecting to see an increase in business over the next three months increased to 84%. And 48% believe this interest will be realised in an increase of at least 5% in completed applications over the same period.
Tailored advice
However, this predicted growth in interest is coupled with the requirement for tailored advice. Effects upon state benefits, the length of drawdown facilities and interest rates continued to rank as first for importance by IFAs. Yet, with increasing numbers turning to equity release as an income supplement, growing numbers of IFAs now also feel that charges and minimum withdrawal amounts are important areas of advice for older consumers.
Equally, concern over redemption penalties has increased over the past three months with 32% of IFAs concerned when advising clients on equity release products.
Jon King, Managing Director at Hodge Lifetime commented;
“The recession continues to stretch people’s finances and older homeowners have been some of the worst affected by rising costs of living and reducing returns from savings. It is therefore, unsurprising that the number of people using equity release specifically to supplement their retirement has seen a marked increase over the past two months.
“Equity release can offer a real solution for older homeowners and the fact that this is being identified is encouraging. However, the importance now rests on the quality of advice they receive. As business is expected to increase, IFAs must ensure all product specifications and implications of these plans are covered with prospective clients at the outset – particularly in respect of redemption penalties.”
Click here to download your copy of the IFA Confidence Index - Issue 4 (Spring 2009)
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