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Take a googol for example. An extraordinarily large number. A googol is the number 1 followed by 100 zeros. Just to try and put that into some kind of perspective, if you had one googol of sand grains, you could fill every last square inch of the observable universe in sand. And you’d still have enough sand left over to fill another one hundred thousand universes.

Let’s scale things down to a number we’re a bit more familiar with – trillions. It’s estimated that the over-55s in the UK own around £4.4 trillion of housing wealth[1]. But even that number, small by comparison to a googol, is hard to wrap your head around.

Imagine you started a job tomorrow working 7 days a week, 52 weeks of the year and it paid you £100,000 per day (and no, that’s not a typo – per DAY, not year). You decide not to spend any of this money, instead you store it in a giant warehouse. You’re not earning any interest, but every day your wealth is increasing by £100,000.

It would take you more than 120,000 years to amass £4.4 trillion in your warehouse.
Even compared to an entire universe filled with nothing but sand grains, that’s a mind-blowing amount of money and it is increasingly a significant source of funding for the retirement dreams, aspirations and needs of today’s later life consumers.

In its latest ‘Introducing the introducers’ research with financial advisers, mortgage brokers and wealth managers, Key Partnerships – a specialist B2B equity release referral firm – found that many of those who have already integrated later life lending referrals into their advice propositions expect this part of their business to grow further.

57% of introducers think that the equity release referral part of their business will grow moderately or substantially over the next three to five years, with 30% of respondents reporting that this is being driven by client-led demand and increasing interest in later life lending solutions.
And despite the recent headwinds across the lending market caused by rising interest rates and funding restrictions, there are a number of strong drivers behind this optimistic outlook:
 
  1. Equity release can resolve financial conundrums and unlock other new business opportunities
    The over-55s use equity release to help solve a range of financial issues, from repaying existing mortgage debt to helping renovate or adapt a home for later life living. But unlocking some of that £4.4 trillion can also lead to other opportunities, whether that be part of a tax and estate planning strategy or through intergenerational lending that helps a first-time buyer on to the property ladder for example.
     
  2. Consumer Duty regulation has forced firms to re-evaluate their advice propositions
    With one in five respondents to the Key Partnerships research saying they’d need to make moderate to significant changes to their operations and practices ahead of Consumer Duty implementation, and a further 38% saving that a few changes would be required, it is clear the new regulation will change the shape of our industry. With a focus on customer outcomes, value for money and the avoidance of foreseeable harm, the benefits of working collaboratively with specialist referral partners has never been greater or more important.
     
  3. Referral business can create an important income stream for an adviser’s business
    Equity release referrals often lead to much higher case sizes than average for the market and this in turn can generate lucrative introducer fees. If we take 2022 as an example, compared to the average equity release loan size of £114,354, by comparison introduced clients of Wealth Managers (£161,313), Mortgage Brokers (£147,793) and IFAs (£117,415) released much higher sums with clients of Accountants releasing the highest of all at an average of just over £183,000.

    In 2022, Key Partnerships paid an average referral fee of £2,252 for each completed case, making referrals an important cash flow element to many of the +8,000 registered firms.

With an estimated £624 billion[2] of equity available to release from the homes belonging to those aged 55+, the vast reserve of wealth currently locked up in the bricks and mortar of later life consumers has the potential to be transformational to both the lives of clients and the business health of their advisers.

Even that is a VERY big number – it would take just over 17,000 years to generate that sum through your £100k per day job, in case you were wondering! And if you’re still wondering how you can make equity release referrals a part of your business model, get in touch with Key Partnerships today. www.keypartnerships.co.uk

How Key Partnerships can help

We provide a robust referral process to help you broaden your advice proposition without compliance responsibility. 

Key Partnerships work with specialist equity release advisers from The Equity Release Experts. Our whole-of-market advisers have their fingers on the pulse to help find clients a solution to meet their needs.

Alongside supporting your clients, for every case that completes, you could also add a valuable income stream to your business. In 2022, the average Key Partnerships referral fee paid on each completed case was £2,252*.
 
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