Helen Morrissey speaks to Anthony Harris about the formation of the Independent Equity Release Advisers Alliance (IERAA) and how it aims to improve the standards of advice offered to many equity release clients
Tell me about your experience as an equity release adviser?
I have been an IFA for just over six years having had 13 years in the financial services industry.
I found that going independent gave me access to a whole new area of products. Equity release just made sense to me straight away as I could see how it worked and I have always been comfortable talking to people about it.
I have a strong ethical background to my work and I believe that when done properly equity release is something that can deliver real benefits to the client.
However, it has been hard discussing equity release in the past as people remember the horror stories attached to it and so it was hard to get recognition from people that equity release was the right way forward. Also, while Safe Home Income Plans (SHIP) did exist and it had developed a product kite mark, it had not at that point really told the public what equity release was all about.
So you have found people’s perceptions of equity release have made it difficult for you to talk about it in the past?
Absolutely. To me it was not just the client who had the hang-ups – it was fellow professionals as well. Unfortunately the big players in the market have not promoted equity release much and the Alliance was borne out of the need to get together with other specialists who have the desire to do things right and give us a voice and a name. Which? magazine recently commented on how hard it was to find equity release specialists. Well, now people have a place to come if they want to find a high quality equity release adviser.
What are the key concerns people have about equity release?
I think the biggest concerns people have is they want to know how much of their house they are giving away.
They also want to know if they are leaving their families with debt.
I know that SHIP has its no negative equity guarantee but people have long memories and remember those people who lost their homes after going into sale and rent back schemes. Obviously people continue to hold misconceptions about the risks associated with equity release and I believe this is because we have not been extolling the benefits of equity release enough.
When did the Alliance start?
We actually started around 12 months ago. I had been talking to Peter Barton at Ashfords solicitors about the benefits of forming a group of equity release specialists based in the South East who would work together to benefit each other. I’d been desperate to do something like this for some time.
We called three meetings across the region with potentially interested partners and we then held a joint meeting. Basically the Alliance has grown from there.
We formed with our own charter and code of conduct in May and then we officially launched in July. It was through this process that we realised the Alliance could be more than a group of advisers working together in one area as it could have national appeal. When we launched nationally we were shocked by the level of response – it was standing room only and we received a huge influx of applications to join the Alliance.
Things have started to settle down now but we are still receiving two to three applications to join the Alliance on a weekly basis. I think the aim will be to grow our membership slowly as we do not want to run before we can walk.
My role is as chairman of the Alliance and I work with a team of six directors, a treasurer and a management team.
How can advisers join the Alliance?
We are promoting the cause of the experienced independent specialist so we set a test for entrance.
First of all advisers need to demonstrate their independence, their specialism and level of experience. We have set a six case a year minimum as not all advisers deal solely in equity release. We also wanted advisers who had been working in equity release for at least two years. It is not that we did not want new people; we just want to demonstrate the need for experience in this market. So far we have 23 confirmed members but there are more than two dozen applications being processed.
The easiest way for interested advisers to contact us is to visit the website www.ieraa.co.uk/ and register by filling out a short form. We are currently charging a £100 joining fee and membership fees are £10 per month.
How often does the Alliance meet?
The management team meets every two months and the aim is for the Alliance to hold development days on a quarterly basis. This will enable members to get more training. We also have a members’ forum which enables advisers to deal with unusual cases and share best practice. It should be a good way for equity release advisers to stay in touch with each other.
Our aim is to be the home of choice for the best advisers in the equity release industry. In the past we have felt that the promotion of equity release has been the job of the providers and we advisers have not been doing it. Now that the Alliance has been formed we now have a forum where advisers can take their views and we can take our message to the government and consumers. We can give the equity release industry an important voice and help to raise the standards of advice as well.
We will also be looking to engage with other professions as well – for instance solicitors. If we can promote our message to other professionals then that will help the equity release market. At the moment we have the situation where if a solicitor does not like the idea of equity release then they will put their client off doing it. This may not be the best decision for the client and so they will miss out. If we can educate other professions more then they will approach equity release from a more educated standpoint and this may not happen so much.
How do you feel the equity release market will evolve from here?
The equity release market is in a state of flux right now. We will get over this stumbling block and I believe the industry will develop more innovative solutions for clients. If we are able to do this then the industry will have a real chance to grow. As an Alliance we have to keep pushing the message. For instance, the recent government review of long term care did not really take the issue of equity release into account as a funding option whereas it can be an important means for many to fund their care needs. To be fair equity release is being mentioned more now than it used to be but we need to do more to promote its importance as a part of many people’s retirement planning strategies.
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