Estate agents could increase the value of their business by around £760,000 by adding later life advice to their business mix, even if they only take on 25 cases a year, new analysis shows.
The report, produced by equity release platform Air in collaboration with research consultants Tony and Philip Wickenden, helps advisers consider whether they should refer clients with late-life lending to specialist advisers or set up their own in-house advice department.
It estimates that the set-up costs for setting up an in-house service are around £21,740, compared to around £4,500 for setting up a referral partnership with a specialist.
Air calculates that it only takes about eight completions to break even via the internal route, or between three and six via referrals.
However, Air says expanding into senior lending does not require new distribution, just a structured investment of time and capital to put in place the right qualifications, templates and governance.
It is argued that keeping later life advice in-house will deliver maximum long-term value as companies earn consultancy fees and full commission.
However, referrals can be the more pragmatic route, especially in the beginning.
By starting with a referral program, companies can gather management information and safely evaluate customer experiences before deciding whether it makes sense to move the consulting in-house.
But Air says customers benefit from both options, although advisors should carefully consider the compliance implications before making a decision.
Founder of Technical Connection and co-author of the report Tony Wickenden says: “The commercial opportunities here are real, but they only work if customer outcomes are good first.
“The companies that will benefit most are those that build a repeatable, disciplined process: clear alternatives, clear explanations of costs, documented understanding.
“That is what protects the client, protects the advisor and makes the turnover sustainable.”
Will Hale, CEO of Air and Key Equity Release, said: “Late lending has moved from a niche consideration to a mainstream planning conversation and the commercial case for building this capacity has never been clearer.
“But the companies that will see these returns are the ones that start in the right place: real customer needs, transparent explanations of costs and tradeoffs, and robust documented understanding before a decision is made.
“With that foundation in place, advisors not only unlock a source of income, but also deepen relationships between generations in a way that delivers solid value over time.
“At Air, our goal is to equip advisors with the insight and tools they need to build productive referral relationships where necessary and provide confident, client-focused advice in a rapidly changing environment.”
Damon O’Connell, director of Key Partnerships, said: “The starting point for many advisers looking to increase customer lending choice in line with their Consumer Duty obligations is to build a strong referral relationship with a life insurance specialist.
“For some consultancies that see a clear market opportunity and strategic rationale to expand their lending offering beyond their core business, developing an internal proposition may be the right route – but this must be approached with careful consideration.
“At Key Partnerships we work with many advisors who opt for a hybrid approach: writing out certain matters internally and at the same time continuing to refer specific matters.
“This is often for lower value, more complex or time-consuming matters that can put pressure on internal resources and distract from the core activities that generate the majority of a company’s revenue.”
Air is hosting a series of webinars, including targeted sessions for financial, mortgage and wealth advisors, with details of how to sign up on its website.