Our recent major survey into consumer attitudes towards equity release reinforced the view that when it comes to seeking financial information and advice, professional advisers are by far the preferred option over banks, the internet, friends and family or the Money Advice Service.

The survey of homeowners aged from 55 upwards also presented clear evidence that those approaching retirement are more likely – in fact, about twice as likely as those already in retirement – to seek information from professional advisers.

Given the importance of the financial decisions they face, this is perhaps not surprising. Around two-thirds of people will have accumulated some pension assets beyond relying on the state pension, but only a small minority felt they have sufficient for a comfortable retirement.

Housing equity withdrawal needs to become a key component of overall financial planning, not least because, for many retirees, property wealth will be a significant part of their overall wealth. Many baby boomers probably feel they have done as well, if not better, from property as from pensions. The advisers task is to help them by building that wealth in to the longer-term decumulation plan.

For those reaching retirement with a clear gap between the amount their pension can provide and what they need to live on, there is already good reason to make sure housing equity withdrawal is an integral part of the discussion. Our research points to a growing number of advisers making it a key component of the pre-retirement fact-find so that the options are understood by the client from an early stage. This includes not just planning for income, but also for inheritance and to help cover any future care costs.

From the clients’ point of view, equity release is very poorly understood. Only one-in-10 could name an equity release provider without being prompted. More detailed questioning showed the majority did not know basic facts such as that equity release is regulated, that interest rates are fixed, or that there is a ‘no negative equity’ guarantee. Some thought that taking an equity release plan would mean they have to pay rent while others worried that the property could be sold against their will, even if they were still living in it.

The study found that those in retirement are more likely to have heard of equity release but they still lacked any detailed knowledge and were as confused as people before retirement. They said that it had not been discussed as part of their retirement financial planning. In effect, for those who do take out plans, it is more likely to be bolted on as an afterthought.

Their attitudes became markedly more positive after they were given a brief explanation of equity release, how it works and how it is regulated. Although there were still concerns, the majority accepted it could have a role for people who need capital or income in retirement, particularly where there were no inheritance issues.

The older retired were more strongly opposed to taking on debt than those approaching retirement or more recently retired. When the destructive power of inflation to erode fixed incomes was introduced into the discussion, many started to see equity release as an important safety net and something they were likely to consider.
These interviews were designed to gather information about how people expected to finance their retirements and what role they saw for their housing equity. They were in no way a hard sell. Yet even a brief, generic description and discussion about equity release resulted in a massive swing in sentiment from typically negative to much more positive. This was probably mostly pronounced when discussing equity release drawdown – borrowing regular smaller amounts rather than a lump sum – which was regarded as a fairer and more sensible option.

As a representative of an equity release provider, it was enlightening and uplifting to see how quickly even quite hostile attitudes could change when a knowledge vacuum was filled with even this most basic level of information. Direct engagement enables people to get the full facts so they can make up their own minds.

And who are the experts at this? Professional financial intermediaries, of course. Homes are both financial and emotional assets but it is only when people have the facts explained to them that they can find solutions that satisfy both their hearts and their heads.