Certainly, ‘brand’ names will be helpful for the equity release sector as a whole even if it may mean that competition and market share might increase and dip respectively for established players
Chris Prior was formerly manager, sales and distribution at Bridgewater Equity Release
“The products are fantastic.” As a provider working in financial services it can be a rare occurrence to hear these words and therefore when they are uttered – particularly about the equity release market by advisers – then it should make us all sit up and take notice. These were actually the words of one adviser who recently attend our ‘round the table’ event and, while you might expect them to say this perhaps to their customer base, it is not often the case you hear them amongst a peer group/provider audience.
In a discussion about how far the equity release sector has moved forward in the last 12-18 months, these were comments made about how the provider community is innovating and developing new products which go a long way to meeting a changing customer need. For example, when it comes to lifetime mortgages it was pointed out that younger customers can often be put off by the roll-up of interest that comes with a lifetime product. Certain providers have addressed this and now, of course, we have products where the client can pay off the interest allowing them to stabilise that interest amount. A product feature which would be particularly noteworthy for those ‘retirees’ who intend to carry on working.
Existing equity release providers have certainly pushed the envelope in recent times and, for example, you now have products targeting those individuals who have much more aspirational needs for the equity they release. While it’s true that many equity release customers use the cash to pay off all manner of different debts there is a growing focus on using the money extracted to fund lifestyles and to also cater for changes that are likely to be brought about by a move into retirement. This is clearly good news for the sector as a whole as it’s important we don’t just focus our product wares on a certain equity release client demographic.
It is perhaps that move towards aspiration rather than necessity which could mean an increase in the number of equity release providers who are active in the market over the next couple of years. There has been much noise around the potential entry of Santander which has previously talked about ‘lifetime mortgages’ which we are led to believe will be the traditional notion of lifetime products in an equity release sense. And of course we have had L&G buying established equity release provider, New Life, in order to deliver a concerted focus in this sector.
Certainly, ‘brand’ names will be helpful for the equity release sector as a whole even if it may mean that competition and market share might increase and dip respectively for established players. However, it’s important to look at the long game when it comes to new entrants, especially those who come with brands which are visible high-street operators and/or are instantly recognisable to many, many potential customers.
I suspect that, in this case, existing providers will be prepared to give a little to get a lot more. If we can develop a much bigger marketplace, then having a smaller share of this will certainly be acceptable, especially if we are pushing way beyond £1-2bn yearly lending volume.
What should also come with more providers and active ‘brand’ participants is marketing spend and therefore increased education and understanding of what equity release is all about. Spreading the word about these products and making them ‘mainstream’ entities has to come from a number of avenues, and while the existing industry has done incredibly well to get the sector consistently punching above its weight, we shouldn’t underestimate the value that can be accrued through major financial services institutions joining the fray.
Indeed, if the ‘newbies’ can work effectively with existing providers plus, rather importantly, the Equity Release Council then I see no reason why the path to mainstream acceptance cannot be achieved relatively quickly. With product developments and innovation showing no signs of abating, and with the traditional notion of what is an equity release customer being turned on its head, the entire sector and all stakeholders could see some major strides being taken within a short space of time. It is therefore important that we all get on board by pushing out the message as far and wide as we can and by working together to develop new products. We need to demonstrate collectively, as an industry, the full potential that equity release sector can do to help people later in life to achieve their financial and life goals.
