Tackling myths and misunderstandings

The greatest selling barriers in any emotive sales area are myths and misunderstandings on the part of the consumer. The equity release market is typical of this.

The findings of our latest research back this up and provide a useful insight into the most common misconceptions consumers have.

What is most striking for the equity release market is that the most common misconceptions lead to over half of all potential consumers seeing it as risky.

One of the most significant findings is that 61% believe that under current plans, they could face negative equity. All Safe Home Income Plans schemes come with a no negative equity guarantee so this finding shows many still have in mind the schemes that proliferated in the late 1980s.

Confusion about security of tenure still dominates many consumers’ minds, with 45% believing their homes would be at risk. Interestingly, the need for professional advice about these deals is made clear by the fact 34% think products are too complex.

And this is indeed true of some of the more recent entrants to the market who, while creating more flexible offerings, have also confused many consumers.

What these findings show is that much work still has to be done to educate and inform consumers. The message is still not getting through.

When you consider that for most consumers considering equity release their priority will be to leave an inheritance, the fact that over 60% think they may well suffer negative equity shows they never get together with an adviser.

While the findings might leave many of us somewhat dejected considering the efforts we have made in recent years to dispel these myths, there is still hope.

Now they are identified, this lies in ensuring these core misconceptions are clarified for all our clients. This may be through mailings or direct discussions, either face to face or over the telephone.

And we must raise the questions first. I have always believed in the old maxim that the best form of defence is attack.

Clients don’t always offer up to us their deepest concerns or beliefs about what we have to offer, so we must make sure we give them the chance to do so.

Dean Mirfin is business director at Key Retirement Solutions