Equity Release Introducers Build for Growth

Equity Release

Equity release introducers expect continuing growth over the next one to three years in their referral business as the market expands, a new report from Key Partnerships, the equity release referral service arm at Key Group

Its Introducing the Introducers report – based on analysis of more than 9,000 partner records and research with introducers – estimates the number of introducers grew by 1% this year as the equity release market remained robust in the face of economic uncertainty.

Wealthier Customers Access Market via Referral Partners:

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 shows. On average they release £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.  Clients referred by lawyers released an average £166,987.

Driving Force behind Referral Partnerships is Client Need:

Nearly two out of five (39%) introducers say the benefit of setting up a referral relationship for equity release is it enables them to help clients with issues they were unable to help them with previously while 36% say it enables them to offer a wider range of services.

Client demand is also a significant driver for introducers choosing to refer – nearly a third (30%) said it was interest from clients which convinced them to set up a referral relationship. Around a fifth (21%) said they preferred to refer as equity release requires specialist knowledge and 22% said their head office or network prefers equity release cases to be preferred.

Future is Bright for Referral Market:

Research with introducers shows 41% expect the equity release side of their business to expand over the next one to three years and 57% anticipate that this will happen over the next three to five years.

With Consumer Duty legislation on the horizon, Key Partnership’s anticipates 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.

How will the equity release referral side of your business change?

Short term (1 -3 years)

Longer term (3-5 years)

Grow

41%

57%

Remain broadly the same

26%

16%

Shrink

34%

26%

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

Jason Ruse, Business Development Director at Key Partnerships 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.  Indeed, 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.

“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.  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.”