Almost 100% of IFAs see equity release as a growth area to cope with pension shortfalls

News - Savings

Written by Ray Clancy

Tuesday, 17 August 2010 09:17

Equity release is set to become big growth area for independent financial advisors, according to a new report.

It will need to support shortfall in pensions savings with 35% of IFAs already thinking it is already a core part of their business

IFAs believe equity release is set to become a big growth area for their future business, to help deal with the needs of the UK’s ageing population, according to research conducted at the recent LV= equity release road shows.

Research amongst IFAs that attended the road shows, which took place in May this year, showed that nearly all, some 98% of them believe that there will be a surge in consumers using equity release over the next few years. Some 35% of the IFAs that attended said that equity release is already a core part of their business.

When looking into the reasons behind the future growth of the market, IFAs cited a shortfall in pension provision as the top reason for a future boost in people releasing the equity from their home, with funding to make home improvements and being able to help family onto the property ladder the next biggest motivators.

When looking into long term care planning, 88% of IFAs indicated that they believed, in the right circumstances, equity release could be the best option for people needing to fund long term care in the home.

‘Advisers can clearly see the importance property will play in people financing their future in and around retirement and a large number of IFAs now class equity release as core to their business. Releasing the money locked in a home can, under the right circumstances, be a lifeline for cash poor, asset rich people in or at retirement,’ said Vanessa Owen, head of equity release.

‘With people living longer and healthier lives many will want a cash injection to help pay for a standard of living they have grown used to in their working lives as well as paying for home improvements, dream holidays or medical care. People’s homes are often their greatest asset, so it makes sense for them to be able to access that capital when they need it,’ she added.

Andrea Rozario, Director General of equity release trade body SHIP, said it isn’t surprising that IFAs believe in the future growth of equity release when you consider the longevity issues we face and the problems this brings. ‘Clearly the shortfall in pensions, along with an increasing need to pay for care in later life is becoming more important for the consumer and turning to their biggest asset, often their property is a logical step. The use of this asset can help alleviate problems for customers as long as they are fully aware of all the options open to them and this is where advisers play a critical role,’ she explained.

The LV= equity release road shows focused on professional connections and lead generation. The events covered issues around state benefits and equity release. In total 256 IFAs who attended the road shows took part in the research.