The demand for Later Life Lending advice

Jack of all trades, master of none’ is often bandied about as some sort of insult, particularly to advisers who want to provide an array of services, perhaps in areas which some might feel require full-time, specialist knowledge and attention.

However, in today’s marketplace, is that really the issue that some believe it to be? Wouldn’t you as an adviser want to be able to deliver a holistic offering for all types of clients with all types of wants and needs? It certainly means you are fishing in a bigger client pond.

That focus on the ‘holistic’ advisory approach, specifically with later life customers, we feel is going to be much more important in the future, by nature of all manner of demand-drivers.

As older homeowners have become more comfortable with utilising their home as an asset, there has been a growing understanding of the uses that level of equity could be put to. So, for example, while we continue to see borrowers using their equity to pay off more costlier debt or to pay off capital following the end of interest-only loans, they are also using equity to help their children with their financial needs, or they are using it to maintain their standard of living into retirement, or fund long-term care, plus of course they could also use it to fund bigger purchases such as cars, holidays, and the like.

Now, of course, and you’ll hear this a lot across the later life sector at the moment, there has been a shift away from the latter type of uses – the ‘wants’ as we might call them – to the ‘needs’ such as paying off debt, etc although it’s still very much the case that homeowners will use later life lending for ‘want’ purchases, from everything to buying the home of their dreams to going on a summer holiday.

However, the wider point here is around the nature of lending into retirement, the greater degree of confidence homeowners have in this now, and where that might lead advisers in terms of working with such clients.

Traditionally, there was something of a sharp split in terms of, for example, equity release specialists and those who worked more in the residential mortgage space, but increasingly both sides of this coin are recognising that being able to work in both sectors is a real benefit to the customer.

Not only in terms of the transactional mortgage advice, but also in terms of servicing the full needs of that older client base. Just because they are taking out a later life mortgage, doesn’t mean they are not presenting with other needs such as GI or protection or the whole gamut of financial services’ needs that the vast majority of people have, whether they are beyond 55 or not.

And, of course, as we touched on, if you are working with an older homeowner – who may well be looking at releasing equity to help family members – then you are certainly in line to be helping those family and friends who may be benefiting from this equity in some way, or indeed whose future purchases and activity in the property market is reliant on this case happening. They too will come with an array of financial services needs that you as the adviser should be looking to cover, rather than letting them ‘walk down the road’ to one of your competitors.

So, we believe there is much more to be said now for advisers having as many strings to their bow as possible when it comes to the provision of later life advice. Now, we also understand that this is a part of the market which is different to the mainstream, residential space, but it is not a million miles away as some might have you believe.

The ‘soft skills’ that you have in abundance can be easily transferable, and while you will need to be a ‘specialist’ in later life lending, this doesn’t appear to us to be a heavily segregated area of the market to get into, with huge obstacles that make it difficult to even get a foothold.

Indeed, at The Right Mortgage we have a training academy specifically for non-CAS equity release advisers, who we can help develop and nurture. We ensure they reach the level of competency required in this area, so as to provide those services to a client base which is growing in number.

That’s the real heart of this argument for any adviser looking at the future and attempting to get a handle on what will be the growth areas for advisers. I think it is fair to say that the traditional 25-year mortgage term, which ends just before retirement and ensures the individual does not take mortgage debt past 65, is not exactly a thing of the past but much less the norm.

Homeowners are much more comfortable with utilising their home, indeed, for many it is the only solution they have, particularly in a situation where incomes are fixed, and the costs of so many goods and services are rising. A large number of people won’t have the pension provision to maintain their lifestyles into retirement, plus there is a growing want to help family members, or indeed just to help themselves in areas such as healthcare/long-term care provision.

That signals to us that demand for later life lending advice is only likely to grow, particularly when you look at the trillions of pounds currently owned (and stored up in) the properties of older individuals in this country.

If you’re considering how you might be the individual/firm to tap into this space, then please get in contact. It may not be as difficult as you think and the opportunities that it could open up for you are likely to be worth the effort.

Victoria Clark is Head of Equity Release at The Right Mortgage & Protection Network