Equity release advice overlooked by most
21 August 2018
Less than a quarter (19%) would seek out an adviser to discuss equity release
Almost half of respondents (44%) feel they could handle equity release without advice
Over a third (39%) are deterred from taking up an equity release plan due to the impact on inheritance and 30% are deterred by the interest rates on offer
Two-thirds (69%) of consumers believe they have a clear understanding of equity release
A third (33%) of respondents would never talk to their family about the subject
A new survey conducted by Moneyfacts.co.uk finds that a majority of respondents (81%) aged 55 or over feel they could take out an equity release plan without the help of a financial adviser. This includes over a quarter of respondents (29%) who would not trust an adviser and 8% who thought advice would be too expensive, while 44% thought they could handle it on their own. Only 19% of those surveyed would seek out a financial adviser.
One of the main factors that deterred consumers from taking out an equity release plan was the effect it would have on inheritance, but many have yet to mention this to those who could be affected.
Rachel Springall, Finance Expert at Moneyfacts.co.uk, said:
“The idea of taking out an equity release plan has clearly crossed the minds of many consumers, but what is worrying is that most of our survey respondents felt they could go through the whole process without seeking advice. This could be an expensive mistake down the line if consumers choose the wrong deal.
“More than half of consumers (52%) were adamant they would not use equity release to fund their retirement, which may mean they are sufficiently prepared for later life. At this moment, it seems that equity release is an option and not a necessity, as a third of respondents (34%) would only use it if they had no other choice.
“Equity release won’t be right for everyone, so it’s positive to see that most of our respondents have considered the impact on their children or dependants’ inheritance. However, one area that could see improvement is striking up a conversation, as almost half of those asked (48%) have not discussed the topic at all.
“It’s important that consumers take the time to carefully think about equity release and discuss it with anyone who could be affected, which is why it’s good that these responses shed a light on consumers’ attitudes toward such a plan. Thankfully, equity release is being taken seriously and is not seen as a quick fix.
“Although some consumers may be set up comfortably for their retirement, not everyone will be in the same boat. Some retirees with insufficient savings might feel that they should release equity from their home because they are equity rich but cash poor.
“Anyone considering equity release would be wise to seek advice, even if they feel they know enough to make it through the process. Going directly to a lender, such as through an advertising campaign, may be easy, but it means customers won’t get the independent comparisons that an adviser can provide.
“Choosing the right plan will typically come down to a combination of different factors. Independent product ratings, such as the Moneyfacts Star Ratings, can help highlight the best plans available, to be considered in conjunction with cost.”
The annual Moneyfacts Equity Release Star Ratings criteria is based on the weightings of specific features and benefits offered, outside of rates, that could be of most relevance to the consumer considering a product.
The survey, conducted independently by Moneyfacts.co.uk, contains the views of more than 300 consumers aged 55 or over.
