LV= believes equity release can change people’s lives for the better

The Association of Independent Financial Advisers (AIFA) recently suggested that independent financial advisors (IFAs) would be well advised to attract new clients from within the growing retirement market. It points out that there will be a 22% increase in retirees between 2011 and 2012 alone.

Commenting on the effect this could have on the equity release sector, Vanessa Owen, head of equity release at LV=, told Mortgage Solutions: “The fundamental increase in the retired population will increase the size of the market, but in itself this will not create a boom.

“However, if you look at the increasing numbers of consumers approaching retirement still with significant debts, then you realise that there are things happening that will undoubtedly increase the numbers of people looking to equity release.”

Ms Owen emphasised the importance of educating customers about equity release: “All brokers advising in the retirement market should be educating their clients in the various ways they can release equity from their property and this process should start when they are discussing retirement income options.

“By covering releasing equity in the very broadest sense at an early stage, including downsizing, rent-a-room, and equity release schemes such as reversions and lifetime mortgages, it will not be a daunting prospect when it becomes applicable for the client to actually release equity.

“These conversations should also include understanding the client’s attitude to equity release and working with the client to ascertain when might be an appropriate time to consider it. This will vary enormously from individual to individual.

“Advisers and providers educating consumers will help. However, confidence-building messages from government and the media are likely to be far more powerful.

“The tools for educating consumers are there. However, for more to positively engage they need to feel this is the right and safe thing to do as fear of making the wrong decision creates inertia.”

Ms Owen points out that the equity release sector offers benefits that other products do not. “Equity release products are one of the few products in the financial services world that truly delights its customers. It can fundamentally change someone’s life,” she says.

“They are not right for everyone, but many, for whom they are right, are missing the opportunity because of the fear created by negative press or because their adviser simply does not include housing equity in the retirement discussion.”