Safe Home Income Plans
Is there enough customer demand to sustain the equity release market?
There’s no question that there is demand. When you look at demographic trends along with other drivers for equity release such as customers who are asset-rich but cash-poor it’s clear that there is latent demand.
Of course, the recession is having far-reaching effects on pensioners. Many have seen their incomes severely depleted, and while house prices have taken a dip recently a lot of pensioners are still sitting on huge amounts of equity. So we are in an evolving situation – our customers are changing and our industry needs to understand more about their requirements and adapt accordingly.
Do you think brokers should take equity release qualifications or refer business to specialists?
All advisers who work in the retirement industry should have an understanding of equity release and be able to recognise when it may be of benefit to their clients. If they decide they do not want to deal with it they should ensure they have a network of qualified contacts they can refer the business to. But to ignore a client’s biggest asset when planning their retirement is unacceptable. What they do with that asset will depend on their circumstances but it must be taken into account.
How has the recent withdrawal of high-profile providers affected the sector?
It’s fair to say there has been an effect on confidence, both among customers and providers. But when you look at the reasons for providers withdrawing such as failure to find funding and the ability to make higher profits elsewhere, it’s understandable. We will see some providers returning to the market this year and we’re also likely to see new entrants at some point, which will help to boost confidence.
What can be done to attract more funding?
If we can educate companies about pension schemes and public pension fund managers to see the benefits of equity release rather than dismiss it as complicated and risky, we will see a rise in interest.
A lot of work is needed to bring the sector to the attention of would-be funders.
Do you think we’ll see new entrants this year?
Prudential leaving the market is seen by many as a gap waiting to be filled so it’s a case of watch this space.
Interview by Natalie Holt