Given the growth in the later life lending marketplace, you might think that we have a nation of clued-up ‘baby boomers’ who are accessing sound advice right across the board for all their financial services’ needs. Nothing it would seem could be further from the truth.
While, recent research from Aegon, is specifically looking at baby boomers and whether they have sought advice from a financial adviser, the read-across to mortgages/protection/GI, etc, should be plainly obvious. Only one in four of those aged between 55 and 73 have used an adviser, even though they own more than a third of the UK’s wealth. And let’s not forget that a large amount of that wealth will be in ‘bricks and mortar’.
There seems to be a complacency from both the individuals themselves, and dare I say it, the advisory profession about their own need for advice and where they go to secure it. Interestingly, this appears to be a lot to do with being ‘financially cautious’ and – this seems like a contradiction in terms – but this caution appears to be stopping them from securing the advice that would undoubtedly help them have greater financial security, and thus perhaps make them less financially cautious.
It’s an odd, sort of Catch-22 situation, but we’re left – it would seem – with large numbers of individuals who could undoubtedly benefit from financial advice, not seeking it. Whether it’s around pension provision, or investments, or indeed how they can utilise their main asset up to, and into, retirement, many 55-73 years old are (for any number of reasons) not seeking the necessary advice.
Many in the market have highlighted the fact that the later life lending sector is on an upward trajectory but it’s also the case that this is still a very small part of the overall lending picture. Yes, we anticipate it growing, but it is also going to take a highly-engaged advisory profession ear-marking just what advisers can do, and the benefits their advice can bring.
I suspect – as is so often the case – that the ‘signposting’ around advice to this age group is simply not good enough. Plus, of course, they may not believe they can afford the advice, or they may have simply muddled through on their own up to this point and think the benefits are not great enough for them to seek advice.
Clearly, this is wrong, and we’ll all have many examples of this type of client and the benefits the advice has brought them, whether that be putting in place a lifetime mortgage to give them a better retirement, or showing them how they might access the equity in their property to fund a child’s deposit, or to make much-needed housing renovations, or indeed to simply move to a firmer footing at the end of an interest-only mortgage.
The latent demand is clearly there, and as more people move towards retirement with far less of a State-provided safety net to fall back on, the requirement for advice is only going to grow and grow. Certainly, from a provider perspective we’re seeing – in the growing number of lenders/products – their understanding of market drivers and where they can illicit greater levels of business from.
In the last week, we’ve heard of reductions in lending from a number of building societies all citing the increase in competition, especially in the mainstream. It’s perhaps no wonder that more and more lenders of this ilk are looking beyond vanilla, and seeking to grow their coverage of later life lending products, particularly in areas such as RIO and, to a lesser extent, equity release.
This is clearly good news for advisers and clients, but it’s going to need a fully-functioning later life proposition, and it’s going to need a full-scale marketing push in order to highlight the services you offer to your target demographic. If done successfully, then I suspect the benefits to the firm will be plentiful – we’re already seeing a number of Stonebridge firms pushing very hard into this market because there’s a belief in the demand and what can be offered.
Your services will not magically appear before the client, but with some marketing nous and a strong offering, there are certainly a growing number of people who are likely to want and need your expertise.
Richard Adams is Managing Director of Stonebridge Group