The later life lending sector is performing well despite wider concerns about the impact of inflation and rising interest rates in the mortgage market.
However, even after years of continued growth, our industry is arguably in need of a rebrand. The rapid rise of the later life lending sector has left some confused as to what our market really offers, who it serves and even what it should be called.
In Q1, the number of new and returning equity release customers hit a quarterly high of 23,395, according to the Equity Release Council (ERC).
Chairman David Burrowes notes that this is ‘the natural result of modern products offering greater flexibility and a property market where growth has far outstripped inflation, alongside an ageing population,’ while Key Partnerships concurs that the number of equity release products alone almost tripled in the year to May.
But with so much choice can often come confusion, so how can we adapt and rebrand our market to further solidify the sector’s future growth? While we have seen progress since we launch our Later Life Lending Census in late 2021, the messages are still extremely pertinent.
Put simply, consumers and advisers need to be reeducated, and reengagement to take our market to the next level and firmly out of its “niche”.
Step 1: Rebrand
Having silos in the later life lending market means the industry must rebrand in order to help provide customers with a clear picture of the range of products that are available to them.
A whopping 41% of advisers believed that the market is still mostly focused on equity release as a single product, while a mere 10% believed that the conversation has actually moved to later life lending as a broader strategy.
It’s high time we stop viewing later life lending as a single suite of products and start to approach it as a wider retirement solution as to be frank, the recent AKG report which put the market at around £154bn suggests the opportunity is immense.
Rebranding the sector from ‘equity release’ to ‘later life lending’ and reflecting this in the language used by advisers will serve to usher in a more holistic approach to financial planning and help customers understand there are more products than just equity release.
Step 2: Re-educate
Three-quarters (76%) of respondents noted that a lack of consumer understanding is limiting market growth. Perhaps more concerning is that 43% noted the same of advisers. If an adviser doesn’t understand or trust the products, they will not speak to their clients.
Many of us have played a role in trying to dispel the myths around later life lending, but the sector is still yet to shake off some negative misperceptions.
In fact, 71% of advisers in our research noted that consumers have an unfavourable perception of equity release (68%) – how they ascertained this wasn’t interrogated but I can’t help but wonder if their own perceptions also came into the equation.
The sector has worked hard to improve product innovation and service levels, but it’s of little value if people are not aware of the developments.
Lenders and advisers must close this education gap if we are to ensure further the growth of the sector. In order to help advisers educate their clients about the sector, Air has recently relaunched its Later Life Academy to provide members with access to a wide range of tools and resources that can help further enhance their business as well as their understanding of the sector.
Step 3: Re-engage
Closely linked to education is engagement. Half of respondents (52%) noted that a marketing campaign to support customer awareness would help them to write more later life lending business, while just under a third (29%) noted the same of educational webinars or seminars.
A similar proportion (28%) stated that better digital tools would drive business. That could ultimately mean many more customers enjoying the benefits of a lifetime mortgage, RIO or other later life lending products.
It is vital that we overcome the isolationist attitude that is hampering the growth of the sector. Better communication leads to better business.
Strong demand is a fantastic launch pad for growth but as we noted at our recent later life lending conference, changes to how we communicate and brand ourselves will take us to lift off.
Stuart Wilson is CEO of AIR Group
