Equity release advisers need to ask themselves whether they adequately consider client longevity, according to Bridgewater Equity Release.
The provider has said this can make all the difference in choosing between a lifetime mortgage and home reversion plan.
Paul Barber, director of Bridgewater Equity Release warned: "Looking at averages is very dangerous. [An adviser] shouldn't just look up on a mortality table and say yes, [the client's] life expectancy is so many years and let's do all of the projections based on that. "
In a poll carried out at an adviser master-class, Barber found advisers were able to predict how long the average person will live for. He is also confident that advisers fully understand client's attitude to risk and house price inflation.
But a second straw poll revealed the majority of IFAs also thought clients were under-estimating their life expectancy.
Barber told IFAs to focus on their client and ask key questions about their health and lifestyle.
He said: "Try to [ask them]: what you think your life expectancy might be? If they say I'm in very poor health, their life expectancy is shorter and the reversion isn't suitable for them. The lifetime mortgage is more appropriate for them.
"But if they come from a family who've always had great health and they're going to the gym three times a week, they might want to think, I'm likely to be one of the ones who might live a lot longer. Should I choose the certainty of a reversion?
"What we're trying to do is encourage the adviser to do a better job and to get the right plans for their [clients] by really considering all of the risks with [them.] Recently the FSA expressed some concerns about advisers influencing customers and effectively recording the adviser's attitude to risk in fact-finds. We're keen on helping advisers by broadening their understanding of all the risks, so they are more confident to discuss [these] with their customers."
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