Clients miss out on equity advice

Over one-third of equity release consumers are arranging their loans direct with providers rather than taking independent advice from brokers, says Key Retirement Solutions.

Dean Mirfin, business director at KRS, says although 90% of lenders insist on clients receiving independent advice before selling them products, a large number of consumers are still not aware of the advice available to them.

Mirfin says: “How many people are unknowingly settling for second best by not speaking to an adviser? That’s what I’m concerned about. People don’t know where to go for advice and we, as advisers, should get involved.”

Research by KRS indicates that consumers have several misconceptions about equity release and believe it to be risky. Some 60% of consumers believe they could get in to negative equity if they release equity from their homes. A further 45% say they believe their home would be at risk and 34% say that the products are too complex. Most people cite more than one reason for being wary of equity release.

Mirfin adds: “I agree that products are complex. The schemes should be explained to the clients after the fact-finding has been completed as this is the time the real needs of the clients show through and the best products can be found for them.

“Then the deal can be explained to them, ensuring they get the best advice.

“A client going to the provider direct is at a disadvantage cost-wise straight away.

“We’re not making enough headway when it comes to consumers going direct to providers.”