September 2007

Leading the way

The equity release market presents an enormous opportunity for IFAs who know how to get the most out of it.

However, too few IFAs have a clearly defined lead generation strategy to position themselves optimally in the market and are not setting aside the business development time required to nurture the move into the equity release arena.

Successful equity release advisers spend a day a week on lead generation. As a guide, IFAs wanting to enter the market should spend at least 20% of their time and resources on marketing and lead generation.

Creating tools to do business is the foundation to a successful lead generation strategy. How you pitch your business, to whom you pitch it, and how to benefit from external lead sources - such as complementary businesses - are the starting points.

Stand out from the crowd

Many brokers position themselves as specialists in equity release, while others may wish to be seen as generalist IFAs who can provide an all-round financial solution. Brokers then need to think about what makes them different from the rest of the market and communicate this in all of their messages. Some may choose to provide advice over the phone and have reduced fees while others may prefer the one on one advice process.

Advisers need to create a compelling pitch document or presentation that articulates what they are offering, the features and benefits of the product, and how they can be contacted. Most equity release providers will have marketing materials that you can draw from to help you draft your content.

Building databases

Once the positioning has been established the next step is to build a database. There are a number of strategies brokers have developed to generate leads. Many start by using their existing client bank to identify potential customers. Given that equity release is now available to people aged over 55, there is often a significant number of customers which can be identified in this way.

The database should be mailed using an old fashioned hand written envelope and stamp, and then followed up with a courtesy call. It is best to mail the database in manageable tranches rather than all at once, allowing yourself time to follow each letter up with a call.

Other marketing approaches include mainstream media - TV, radio, newspapers, internet-based lead generation, affinity marketing and seminars. As a rule, a typical marketing spend will be 10% of revenues on a monthly basis. In planning any advertising, it must be remembered that the media costs are probably the most expensive element. All too often the focus is on what the ad looks like rather than whether the right media is being selected to reach your target audience.

Many brokers develop an introducer network. This tends to include lawyers, accountants, financial planners, inheritance tax planners, estate agents, mortgage brokers and other financial advisers who are not qualified to sell equity release. Leads can also be generated from local organisations such as the Citizens Advice Bureau, the Rotary Club, Golf Clubs and other interest groups. Having built up a client base, word of mouth, particularly among the 55+ age group can be very effective.

To make the most of this network, IFAs should develop a B2B referral or introducer agreement which sets out the fee structure for commissions on products sold as a result of the referral. This is typically between 20% and 70% of any proc fee.

An approach frequently used is to market equity release as part of planning for retirement or for inheritance tax planning rather than as an equity release product per se. This has proved to be very effective in encouraging people to attend retirement based seminars, which will have equity release as one component of overall retirement planning.

Most equity release marketing focuses on people aged over 55 who would potentially qualify for an equity release plan themselves, however you could target a younger audience: adult children who would prefer to receive their inheritance early rather than waiting until their parents die. Money released from their parents' home could be used for example to help purchase a property, to pay school fees or to pay off the mortgage. An additional advantage of this route is that so long as the parents live for seven years, the money transferred to the children is free of inheritance tax.

All this may sound a bit daunting. However, in practice this is no more difficult than entering any new market. The amount of support and guidance available is high and the rewards from entering this fast growing market are also likely to be very attractive.

Georgina Smith
Sales and Marketing Director
Stonehaven Equity Release