Report finds 90% of customers would recommend equity release to family and friends.

A report from Key has found that 90% of customers would recommend equity release to family and friends. Writing exclusively for the Council, the firm’s CEO, Will Hale, considers some of the wider findings.

Housing wealth has played a role in peoples retirement finances since before retirement was even a recognised concept.  Whether it provided a safe roof over your head as you aged, an opportunity to make a little income by renting a room out or helped to secure the future of the next generation through inheritance, it was an asset to rely on.   Over the last twenty-years, it has played an even bigger role through the mechanism of equity release and we’ve seen over 557,000 plans taken out worth £32.6 billion since January 2000.

While these figures are obviously impressive, as the UK’s largest equity release broker, we wanted to understand what the impact had been on these customers and their emotional as well as financial wellbeing.  To achieve this, we spoke to over 600 of our customers who had taken out the products within the last 20-years – arguably the biggest study undertaken on this cohort – and found that 90% would or had recommended these products to family and friends due to the impact on their lives.

Indeed, 35% said it had improved their general standard of living, 30% said it allowed them to maintain their standard of living and 23% said enabled them to help family and friends.  Others cited it as allowing them to clear unsecured debt (21%) or manage their outstanding mortgage (20%) and the list goes on with just 10% saying that it had not had a positive impact on their finances.

The emotional benefits were also clear with 50% saying it has eased day-to-day financial worries and 32% saying it means they worry less about future finances.  One in five (22%) also said it had allowed them to adapt their home to continue living in it.  These are all extremely positive findings and coming from an equity release adviser, you might be forgiven for being sceptical but we also asked if our customers had any regrets.

Over half (56%) said they had no regrets and for those who did, they were mainly situational.  The fact it reduced the inheritance they could provide their family with was a regret for 15% while 12% wished they didn’t have to borrow in later life and 12% wished they could borrow more.  Finally, 21% regretted that when they took these products out there were not more alternatives.

While these regrets are situational, it does clearly highlight the importance of challenging customers’ perceptions around what is important to them now and how these priorities may change in the future.  We must act as advisers not ‘order takers’ always balancing short and long-term considerations.  Also, with modern equity release products being flexible enough to adapt to a customer’s changing circumstances through later life (e.g. turn on/turn off repayments, make use of downsizing protection etc) we may well see the proportion of those who have no regrets increase. However, if we are to achieve this we require advisers and lenders to remain engaged with customers and to support them in using the features/benefits available across the lifetime of the loan.

There is a lot to digest in the report (click here) which is not unsurprising as it does cover 20-years of evolution.  However, one clear thread that does come through is that while borrowing in retirement is certainly not what most people aspire to, those who do are active advocates for these products – enjoying more financial security and peace of mind than they might otherwise have had.

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