Additionally, 14 per cent of those surveyed say equity release would represent between 25 per cent and 49 per cent of their retirement finances should they take out a plan, and 9 per cent say they thought it would provide between 50 per cent and 74 per cent. If they were to take out a plan, a quarter of people expect equity release to provide at least 25 per cent of their retirement funding.
When it comes to seeking advice on equity release, 35 per cent of people say they would consult an IFA and 26 per cent say they would speak to a specialist solicitor, compared to 22 per cent who would rely on the internet and 18 per cent who would trust family and friends, indicating that consumers still prefer face-to-face specialist advice when it comes to equity release (see table 1).
An important finding for the adviser community ahead of the Retail Distribution Review was consumers’ negative attitude to a fee-based model for specialist advice. There remains a clear preference for ‘free’ advice, with 59 per cent saying they would not be willing to pay for an hour of advice from a specialist equity release IFA, 56 per cent would not be willing to pay for a specialist solicitor, and 66 per cent would not want to pay for an hours advice from a mortgage broker. In comparison, the value of accountants and solicitors is perceived more highly – just 36 per cent and 32 per cent respectively say they would not be prepared to pay for this advice. Even among those who will pay, consumers show a reluctance to spend more than £50 an hour; just 10 per cent say they will pay above this for a specialist equity release financial adviser.
When seeking specialist equity release advice 42 per cent of consumers say they thought it was important advisers did not charge an upfront fee, with 42 per cent saying they also thought a free initial consultation and specialist qualifications were important.
Claire Barker, chairman of ERSA, said: “This research shows that in consumers’ minds equity release is becoming a normalised part of retirement financial planning. Significant numbers of people are now expecting equity release to provide an element of their retirement income. It is good also that consumers preference is to seek specialist advice from an IFA for this complex product. However, attitudes towards paying for this advice are concerning and these findings show that more needs to be done to promote the advantages for consumers of a fee-based model of advice.
“ERSA solicitors work on a ‘no completion no fee’ basis so our clients only pay out of the proceeds of a plan on successful completion. Hourly rates don’t apply for us, as opposed to many general practitioners, and means that clients don’t have to find money upfront.”
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