Equity release often missing from financial advice conversations

Concern about lack of holistic discussions on retirement income

Canada Life has issued a warning about access to well-rounded information on retirement income options. The company say that just 7% of homeowners are presented with equity release as an option during retirement planning conversations.

Among homeowners aged 40+ who had spoken to a financial adviser about their retirement plans, just 7% were informed about equity release as an option unless they asked about it. 

Looking further into the data, just 6% of people in the sample asked their financial adviser about equity release. More than three-quarters (76%) reported not discussing equity release with their financial adviser at all.

Patchy awareness of how equity release works

On the face of it, more encouraging news is that 73% of homeowners surveyed were familiar with equity release. However, there appears to be limited understanding of how it works. 

For example:

• 67% did not know that you could still pass your home onto your children after you have released equity.
• 63% did not know whether you could move house after doing so (you can, in many cases)
• 82% were not aware of the no negative equity guarantee, with 42% wrongly believing you could end up owing more than your house is worth.

It is important that anyone considering equity release understands basic principles like these. That’s why here at Equity Release Wise, we have published information-packed articles, including How does equity release work?, The pros and cons of equity release and Equity release examples and case studies.

The need for retirement income options 

Canada Life say that involving later life lending (including equity release) in financial planning conversations can help homeowners understand how to potentially unlock greater financial flexibility in retirement. This is particularly important, they say, as their research shows that just 48% of homeowners are confident that their savings and income will last through retirement. 

Being aware of how options for unlocking money tied up in property work could be important for many people at or approaching retirement. Equity release is one of these, along with downsizing and retirement interest-only mortgages (RIOs).

Reviewing later life lending

The Canada Life survey comes less than two months after the Financial Conduct Authority (FCA) announced plans to undertake a market study focused on later life lending. 

Pete Maddern, Managing Director, Retirement at Canada Life said “It’s encouraging to see the progress the FCA has made in recent months to explore how the later life lending sector and advice framework should evolve. 

“While equity release will not be right for everyone, these developments have the potential to improve consumer understanding and awareness of later life lending, and to enable advisers to have more holistic conversations with their clients about whether equity release could help them achieve their later life and retirement goals.”