The results of Prudential’s Adviser Opportunity Survey, also reveals 21 per cent believe equity release will become the biggest area of growth for retirement provision.
In the 1970s, with flared trousers, big lapels and kipper ties prevalent, advisers’ primary business was advising on savings. This was followed by insurance products and pensions.
But, as Bucks Fizz and Culture Club took us into the 80s, advisers also changed with the times. Pensions were at the forefront of clients’ minds and savings were relegated to the back seat.
By the 1990s, with the rise of boy and girl bands paving the way for a new pop and political era, pensions remained the primary product for IFAs entering the market. This new generation of IFAs, however, was the first to say that investment products were one of their key areas of focus for future growth.
Irrespective of when they started, whether this was in the 70s, 80s or 90s, IFAs now name investment and pensions as their core business focus.
Jan Holt, head of sales at Prudential Lifetime Mortgages, says: “It is interesting to see how the focus over the years has changed for IFAs. However, if you look back over time it is not surprising that advisers in the 70s were focusing on savings as banks were creating deposit accounts along with the fact that there weren’t many investment bonds around.
“While in the 80s, the move away from state pension schemes drove the demand for private pension plans. Today, given the buoyant stock markets of recent years and the poor provision for pensions, it is no surprise to see that all three generations of IFAs now focus on investments and pensions.”
When asked to name the largest potential growth areas over the next five years, it’s perhaps no surprise, given the current climate of insufficient pension provisions, that retirement planning tops the list.
But it is equity release that shows the biggest potential, with 16 per cent of advisers claiming that these products will be their biggest growth area in the future.
This is further supported by the fact that for 95 per cent of advisers, this is because it will be likely that their clients will have to consider using equity release to supplement their retirement income.
Holt says: “With one in four retired adults – that’s 2.7 million people – saying they do not have sufficient income to meet all their financial commitments, the demand for finding ways of supplementing their retirement income is paramount. For many people the traditional pension vehicles, such as the state pension, simply aren’t enough to provide this and more are looking for alternative ways to boost their income, which for an increasing number is using equity in their property.
“Equity release products clearly open up new opportunities for people who do not want to leave their home but still wish to access the money locked up in their bricks and mortar and we therefore expect the equity release market to grow to £3 billion over the next five years. We have seen a lot of innovation in the market recently and products are now more and more tailored to customers’ needs and wants.”
