Complex needs of older borrowers require all our collaboration
Retirement has become a moveable feast as life stages are increasingly less defined. Gone are the days of simple 25-year mortgages paid off before retirement, so lenders and intermediaries need to adapt to moving trends and confront the new challenges they represent.
The CML has taken on this cause, producing a report on retirement borrowing that identifies ways the industry can improve for older borrowers. We suggest a range of next steps and calls to action that will require cross-collaboration on all fronts – industry, regulator and government – for progress to be made.
Our focus initially is on some key areas: monitoring the market effect from new pension freedoms; continued engagement with the intermediary sector towards creating a more seamless advice framework for older borrowers; exploring age group-specific products that flex between mainstream and lifetime for the 50-to-75 age bracket; and product innovation for the 65-to-74 age group.
Looking outside the industry, we ask the FCA to consider how regulation can encourage a better holistic approach for mortgage, lifetime and investment advice, and work towards standardising the definition of retirement. We ask the PRA to ensure that acceptable models for Solvency II, involving requirements for matching assets, do not lead to unintended consequences and the withdrawal of products that would benefit consumers. And we ask the Treasury to consider tax relief on professional advice received at retirement, and to look at how other countries navigate the issue, such as state-backed guarantees seen in the US.
There is no silver bullet to address the complex issues involved in the housing and financial needs of older borrowers. But the groundswell of willing participants across the industry who want to engage in this complex issue is encouraging and provides true potential for us to make progress.
This will not be a revolution, but an evolution.
We will maintain the momentum achieved so far and, through collaboration, aim for consistently good advice, sensible housing solutions, and products that offer the financial outcomes that many older consumers are looking for without creating any disproportionate risk to lenders and advisers.
Paul Smee, Council of Mortgage Lenders
The best brokers leave no gaps unfilled to meet their clients’ needs
Retailers and the media often coin new names for specific days in the calendar. In the run-up to the festive season we had the US-inspired Black Friday and online shopper favourite Cyber Monday. The last Saturday before Christmas has amusingly been dubbed Panic Saturday.
This year I heard of a new day in the retail calendar: the cynically titled Take-Back Tuesday. Apparently, Tuesday 29 December was when hoards of us hit the high street to return unwanted presents. It is hardly in keeping with the spirit of the season but it does highlight the importance of getting people what they want.
By understanding a person’s needs and wants, you can make better use of your money and time. And this ability is also useful when it comes to selling. When we look at our brokers, the most successful of them do this time after time. The best in the business are the ones who understand a client’s wants and needs even if the client has not expressed them. They maximise their income per household by establishing – and then satisfying – each family member’s needs.
In a typical household there will be customers with very different needs. If you focus only on the original reason for the appointment and do not explore the other opportunities available, you will miss valuable sales. Even if you choose not to provide the advice required to service these needs yourself, you can pass on these customers to expert partners, thus keeping out the competition and earning a commission. The customer will be happy that all their needs have been met and will no doubt return to you in the future.
Get to know your customers and make sure you do not miss any opportunity by ensuring every possible need has been explored and, where possible, satisfied. The best in the business do not leave any gaps.
Jason Berry, Uinsure