In our recent Parameters survey we asked paraplanners for their views on equity release. The full results can be found below.
They exhibit an interesting contradiction, in that while 81% of respondents felt equity release/later life lending products would become more important in financial planning, in one way or another) and 75% believed they would become more important in IHT planning in particular, just 20% of paraplanners said they researched the products currently in their recommendations to clients.
The ageing UK demographic was the main reason paraplanners took these views. As one said: “By 2050, around 25% of the population will be over 65, and many will be asset-rich but income-poor. Housing wealth is often their largest financial resource.”
In terms of IHT planning, with unused pension funds to be included in IHT calculations from April 2027, paraplanners saw the potential to use equity release to help remove property value from an estate. “This makes property an even more critical planning tool as a core strategy for tax mitigation.”
Not all paraplanners were complementary about the products and there is a clear correlation here with the bad reputation these types of products have received in the past, with 33% believing they we still under a cloud. However, 43% felt they were improving and 5% thought current products were a lot different.
The FCA has recently highlighted the need for equity release in its recent Mortgage Rule Review: the future of the mortgage market consultation. 40% of respondents thought this spotlight would see more financial planning firms consider the products for certain life stages in the future.
From responses as to why paraplanners were not researching and using equity release/later life lending products, reasons cited included that the firm chose not to offer equity release; there was no call for it from clients; the firm would outsource research if needed; there are specialists in equity release within the firm so it doesn’t fall within the paraplanner’s remit; a lack of authorisation in the firm; and “Our clients are all high-net worth individuals and do not need to release equity from their homes.”
What is also likely to be holding back the equity release market currently, is that in eschewing the products, advisers do not know enough about them to actively recommend them to clients. 80% of paraplanners felt advice firms in general did not know enough about the products.
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