Helping your clients through retirement think house, think equity release

Transcription

1 For For financial intermediary use use only. only Not approved for use with customers. Helping your clients through retirement think house, think equity release Not qualified? Referrals - The Right Way Vicky McDaid, Specialist Sales Manager -, Equity Release

2 Housekeeping On the top right of your screen you will have a dashboard which enables you to ask questions throughout the webinar. To raise your hand in a webinar click here. To ask a question, please type here and we will respond to your question either in the webinar itself, or shortly thereafter.

3 Agenda What is financial planning and the role of equity release in financial planning? What are the opportunities in the equity release market? What are the issues facing the equity release market? Accessing the opportunity through The Right Equity Release referral service. Next steps Your questions with Vicky McDaid and Rob Brennan

4 Equity release options for accessing the market Qualified? ER a business priority? Want to be qualified? Products/ Support Referral to Qualified Adviser Learning Opportunity

5 What is Financial Planning? Financial planning is about ensuring that the right amount of money is delivered into the right hands, at the right time.

6 Thousands ( ) Some food for thought Average house price 163, , Source: Nationwide House Price Index full year 2012

7 Building equity release into the financial planning process A spotter s guide (available on 1. Debt repayment 2. Day to day living expenses 3. Maintaining your lifestyle 4. Improving your lifestyle 5. Helping your family improve their lifestyle 6. Later life planning

8 12 Scenarios Debt Mortgage shortfall Credit cards Retired 5 years+? Struggling from inflation New car Funding holidays Holiday home Private medical care Property deposits Help with attending university Accelerating inheritance Funding home based care

9 Equity release client spotters guide A client spotter s guide (available on Mr and Mrs Mortgage Shortfall Mrs Twilight Mr and Mrs Level Income Mr Ben E Factor

10 All this begs two questions How many clients do you have who have needs such as those in the 12 situations we ve just looked at that may currently be inadvertently overlooked? To what extent do you routinely rule in or rule out the use of equity release with all your clients?

11 Significant property based wealth Over 4.5 million households in the UK are owned outright by people aged 65 or over*; Research in 2005 revealed that there are about a million older home owners in England whose incomes are so low that they are eligible for pension credit (whether or not they actually claim it), yet they have equity in their home in excess of 100,000.** In total, it has been estimated that homeowners aged 65 or over own over 750 billion in un-mortgaged property*. Source: * Key Retirement Solutions, Jan 2013 ** Housing-rich, Income-poor: The Potential of Housing Wealth in Old Age (Institute for Public Policy Research, October 2005)

12 Property wealth 210,761,600,000** 752,720,000,000* Source: * Key Retirement Solutions Jan 2013 ** Based on average 28% LTV

13 Equity release Debt repayment 150,000 Interest only mortgages maturing annually for next 7 years.* By 2017, 40,000 interest only mortgages maturing held by over 65 s.** 3.2 Bn per year by 2017** 40,000 mortgages per year Source: * FSA Mortgage Market Review Data Pack December 2011 ** FCA Interest Only Mortgage Review

14 Equity release clients LTC Estate Planning Debt Repayment Customers aged 55+ Improve lifestyle Aspirational Day to Day living expenses Maintain Lifestyle Mintel Report Equity Release UK, May 2011

15 The role of housing equity in retirement planning

16 Issues and opportunities Mortgages into retirement. Interest only mortgages. 33% solely reliant on state pension.* Average pension fund not generating income expected. Level incomes eroded by high pensioner RPI.** * Just Retirement research, The role of housing equity in retirement planning July ** The Age UK Enterprises Silver RPI, November 2010

17 Nostalgia vs. Reality a time for change! Property value Annuity rates

18 What do clients need? Is it education? Mortgage

19 What do clients need? Is it education? 15 years 10 years 5 years

20 Equity release a simple explanation Equity release is the process of using the value of your home to raise cash. It allows you to borrow against the value of your home if you are over 55 and own your property. You normally don t need to make any payments during your lifetime. Instead, the loan plus interest is repaid when you die or go into long-term care. After the explanation 26% of the at-retirement group would consider equity release.* Those in retirement wanted reassurance that the loan would not exceed the property value.* * Just Retirement research, The role of housing equity in retirement planning July 2012.

21 Risks Wrong product Losing equity What is the biggest risk regarding equity Spending money too soon release? Eviction Benefits & tax Portability

22 Equity Release Council launched May 2012 The role of ERC is to: Change the consumer outlook Grow ERC membership Provide the same guarantees and safeguards as SHIP Six point code of conduct: 1. Remain in their property for life. 2. Clear and simple presentation of products. 3. Right to move without financial penalty. 4. Legal work completed by client s solicitor. 5. ERC certificate showing the terms and conditions and impact of ER on their estate. 6. No negative equity guarantee (terms and conditions available on request)

23 Customer feedback Equity release has made a significant difference in your retirement? Yes Other 96% Source: Just Retirement limited Customer Survey, April 2010

24 Equity release options for accessing the market Qualified? ER a business priority? Want to be qualified? Products/ Support Referral to Qualified Adviser Learning Opportunity

25 Rob Brennan Director The Right Equity Release The views expressed here are those of The Right Equity Release, not Just Retirement Ltd 25

26 Why Equity Release? Pension annuity rates are poor, meaning reduced retirement income Bank savings interest rates at long term low Cost of living increasing High unemployment in older age groups First rich generation Children in financial need for help You want to just enjoy life The views expressed here are those of The Right Equity Release, not Just Retirement Ltd 26

27 How Clients Use Equity Release: Home Improvements 55% Cushion against large bills 12% Second property 10% Buy a car 10% School or University fees 9% Increasing income 6% Maintain lifestyle 6% Holidays 6% Hospital/long term care 2% Other 2% The views expressed here are those of The Right Equity Release, not Just Retirement Ltd 27

28 To Summarise A vehicle to safely raise funds from your home in a flexible way within a regulated product As a lump sum or drawn down in smaller amounts at ad hoc or structured times Financial security as there are no repayments during your clients lifetime No negative equity guarantees A means to raise the money to repay mortgages in retirement to free up retirement income The views expressed here are those of The Right Equity Release, not Just Retirement Ltd 28

29 Mortgage Regulation, The changes we faced: FSA s attitude to dabblers- High risk area, just having examinations not enough, looking for continuing competence SHIP- advisory body set up to help grow consumer confidence now re-branded as The Equity Release Council FSA- all products are now regulated New regulator FCA The views expressed here are those of The Right Equity Release, not Just Retirement Ltd 29

30 Why recommend The Right Equity Release? National sales force-professional, qualified, experienced, experts meaning higher conversion rates Not authorised- no need for expensive PI cover, further exams in specialist areas Reciprocal leads- Mortgages, pensions, investments etc. We give back to our introducers Special deals- Market leading enhanced terms with many lenders, cash back, free valuations enhanced commission rates, lower interest rates The views expressed here are those of The Right Equity Release, not Just Retirement Ltd 30

31 Where will Equity Release fit in your portfolio? Lending in retirement- Stonehaven s Interest Select Plan Adverse credit a possible lending solution Inheritance tax planning- turning a fixed asset into a liquid asset, gifting or investing. The mortgage ladder- 100% mortgages are back Rising long term interest rates on mortgages- Fixed interest rates for life Buy to lets- raising money from your buy to let portfolio to free up equity in stages to mitigated CGT Second homes and Holiday homes- releasing money tied up in investment properties Divorce- Raising the funds to pay a spouse when you have little or no income The views expressed here are those of The Right Equity Release, not Just Retirement Ltd 31

32 What s in it for YOU? Average loan is 60,000 Procurement fees vary between % Average commission (based on 3.25%) = 1950 We pay 50% of the procurement fee = 975 All you need to do is identify potential clients and pass on the name and contact details and we do the rest! The views expressed here are those of The Right Equity Release, not Just Retirement Ltd 32

33 When a Referral makes Sense Earn Extra Income If this is an area of financial planning you would like to provide your clients with solutions and assistance, then we are here to help. We will sign a referral agreement which will contain a strict no cross sell agreement, any other business found by the consultant will be fed back to the referrer. The views expressed here are those of The Right Equity Release, not Just Retirement Ltd 33

34 Your Introducers - Where will you get leads from to earn you income? Existing clients- How can we help? Solicitors- Divorce, bankruptcy, Wills and probate lawyers, clients in their existing client bank Accountants- Clients who need a cash injection for their business Mortgage brokers- Cannot help clients with adverse credit or lending into retirement Will writers- seeing retired clients who may need help Debt management companies- Using a ER to be able to raise fund to keep property Age related groups- Age UK,etc Breakfast clubs- Weekly, monthly clubs where you can make a special request Annuity and pension advisors- Advising clients who are about to retire on a reduced income The views expressed here are those of The Right Equity Release, not Just Retirement Ltd 34

35 In Summary Refer an enquiry We visit the client A case is written Valuation and offer carried out Case completes Commission arrives, you get paid first. From referral to completion in 4-6 weeks, this is why The Right Equity Release is the right choice for you and your clients. The views expressed here are those of The Right Equity Release, not Just Retirement Ltd 35

36 Intermediary poll referring clients to The Right Equity Release I m interested in referring clients to The Right Equity Release I want to find out more about getting qualified I want to find out more about equity release marketing

37 Action plan

38 Action plan Refer to The Right Equity Release service

39 Supporting you Calculators Literature library Marketing material Events, webinars and revision courses Equity release research Full report available at @VickyMcDaid

40 Important information It is our intention that the information contained within this presentation is accurate. We have taken all reasonable steps to ensure that it is up-to-date and where relevant, reflects the current views of our experts. However, we do not accept any liability for errors or omissions in the information supplied and if you require clarification on anything, our recommendation is that you contact us at the address below for verification, or call Our registered address: Just Retirement Limited Vale House, Roebuck Close, Bancroft Road, Reigate, Surrey RH2 7RU. Regulatory information: Just Retirement Limited (Registered in England Number ). Registered Office: Vale House, Roebuck Close, Bancroft Road, Reigate Surrey, RH2 7RU. Just Retirement Limited is authorised and regulated by the Financial Services Authority.

41 For For financial intermediary use use only. only Not approved for use with customers. Your Questions With Vicky McDaid, Specialist Sales Manager Equity Release and Rob Brennan, Director The Right Equity Release