Discussing financial matters with family members can be rather tricky. For the retired or soon-to-be retired, later life is a constant balancing act between the desire to help the family and the need to support themselves.
Throw in the fact that the older generation tends to be more guarded when it comes to open discussions about their money, and you risk creating a perfect storm of emotion where no one is left pleased.
For equity release customers, these conversations revolve around their biggest and most valuable asset: their home. Unfortunately, for those who do consider tapping into their housing wealth, family disputes can often stand in the way.
According to advisers at Bower Retirement, issues within the family can be a barrier to clients moving forward. Some 69% said family issues are the biggest barrier, compared with just 31% who replied that interest rates were their clients’ primary concern.
The reason children, grandchildren and other relatives are concerned can be manifold, but the impact on possible inheritance is routinely mentioned.
Very often the Bank of Gran and Grandad is being extremely generous and even helping their relatives bridge the widening gap between renting and owning property.
Almost £75,000 is released by the average lifetime mortgage customer, and according to Bower Retirement research 31% of customers are using some or all of the money they release to help relatives get on the property ladder.
Other research has shown that those withdrawing cash from their homes are giving an average of £33,350 to their relatives for deposits; some very generous grandparents are even handing over more than £100,000.
It is strange that issues within the family still remain so prominent. The reason, in my view, comes down to miscommunication. Sometimes, customers will meet with their adviser alone and then tell their family members separately.
Of course, it is the customer’s decision whether or not to involve their family, but the adviser should always suggest that discussions with the family should be open and urge their clients to let their family members attend.
Having the family present at the initial meeting is one way that we can help circumvent issues further down the line.
Some customers might feel embarrassed telling their family they need help with their finances, but we must get over this stiff upper lip mentality and tackle problems together. Sometimes family members might not be aware that their parents need assistance, and they can step in to help out.
Ultimately, we want to help our retirees enjoy later life, so open discussions with family members from the outset could often mean that equity release is not necessary. However, the adviser cannot ignore the potential undue pressure their customer may come under from relatives, so naturally this decision has to be the customer’s.
When equity release is the right fit, there is no better way to present the facts than having a specialist adviser there to explain.
Unfortunately, the lifetime mortgage is still massively oversimplified in the mainstream media and the fear that customers will somehow lose their home remains frustratingly present in many articles concerning equity release, despite the “no negative equity guarantee”.
Laying out the facts
I don’t blame family members who fear their whole inheritance might be wiped out or they will somehow be left with a massive bill to pay. We still need to do better in getting the facts of equity release out in the mainstream media.
Once relatives and prospective beneficiaries attend a meeting and get to hear from the mouth of a specialist adviser exactly what modern equity release is about, their fears are invariably quashed.
Equity release in 2016 has evolved into an incredibly versatile stable of products that can solve dozens of problems. The product options are becoming more diverse; lenders are becoming more creative; and well-respected, well-known providers are starting to join the market.
But we need to get this message out to the masses – and when advisers do meet with clients, ensure that any worries the family might have are dealt with.
The best way to do this? Just lay out the facts.
Andrea Rozario is chief corporate officer at Bower Retirement Services