IFAs who are able to discuss the complex nature of their clients’ entitlement to state benefits, and any subsequent effect on equity release are best placed to help older homeowners, says the Equity Release Solicitors Alliance (ERSA).
While it is not an FSA requirement for IFAs to calculate their clients’ overall entitlement to means-tested benefits when advising on equity release, those that have sufficient knowledge of options available and the impact they have upon a scheme could increase the client base available to them.
Currently only one third of all pensioners receive means-tested benefits, but approximately half are believed to be eligible for state help. However, for a vast majority of older homeowners, receiving benefits does not necessarily rule out the potential for them to take out equity release. Financial advisers should get to grips with the intricacies of this area if they are to expand their services and offer all encompassing advice for clients.
Claire Barker, chairman at ERSA, commented: “The nature of means-tested state benefits is complex and advisers may find that in many cases, when clients discover that they are entitled to benefits they still decline them, preferring not to rely on the state, and continue to fund their lives independently.
“IFAs who can address the issues surrounding entitlement to state benefits are best placed to help a wider range of clients. As solicitors, we do not recommend plans but we do talk clients through the effect equity release might have on their entitlement to benefits and the efficiency of this process can be enhanced by IFAs who are in a position to explain and clarify the situation with their clients early on.”
