Equity release introducers anticipating market growth

Equity release introducers are expecting continuing growth over the next one to three years in their referral business as the market expands, a new report from Key Partnerships has suggested.

The equity release referral service arm at Key Group has estimated that the number of introducers grew by 1% this year as the equity release market remained robust in the face of economic uncertainty.

Key Partnerships’ report, which was based on analysis of more than 9,000 partner records and research with introducers, indicated that lawyers and legal services firms are increasingly referring equity release customers to specialists, making up 6% of introductions this year compared with just 1% in 2021.

However, the main source of referrals remains mortgage brokers who make up 64% of all introducers, followed by independent financial advisers who account for 11%, and wealth managers who contribute 9%.

Referral customers release more property wealth than the wider market, Key Partnerships’ data revealed, releasing an average £133,048 compared to £114,354 for the wider market.

Customers referred by accountants released the most at £183,334, compared with £161,313 by customers referred from wealth managers, and £117,414 from clients referred by IFAs. The analysis also showed that clients referred by lawyers released an average £166,987.
 
Business development director at Key Partnerships, Jason Ruse, said: “While the referral market mirrors the equity release market to a certain extent, the forces impacting referral partners also have a knock-on impact.

“While mortgage brokers remain our largest introducer group, the stamp duty holiday in 2021 and the recent market upheaval have seen them very focused on ‘business as usual’ rather than exploring partnership opportunities.

“As we move out of a pandemic while managing these challenges, the equity release referral market has remained robust and we’ve seen modest annual growth in the number of organisations choosing to refer and a 13% growth in referrals in 2022. However, we do anticipate that as the implications of Consumer Duty become clearer and organisations which are impacted understand the requirements, we will see significantly more interest.”

With Consumer Duty legislation on the horizon, Key Partnerships is anticipating that more people will be considering how they offer these products themselves. or how they can build strong specialist referral relationships rather than more informal hand offs.

The research revealed that 88% of respondents intend to maintain some referral relationships – with 45% just referring and 43% providing some advice in-house as well. In the longer-term, over three to five years, 22% said that they have such confidence in the equity release market that they will be looking for a specialist to join their firm to provide access to these products within the firm.

“Informal hand offs will no longer be appropriate in a world that is focused on good customer outcomes and organisations will need to clearly show how they are supporting their clients,” added Ruse.

“Against the backdrop of the current economic uncertainty when more customers are looking to housing equity for support, it is perhaps unsurprising that our introducers anticipate that they anticipate that this area of their business will grow over the next few years.”

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