Reverse mortgages more important going forward
Private residential property equity seems set to become a more prominent feature of financial planning, according to a recent Trowbridge Deloitte survey finding that almost all dealer groups surveyed have a means of providing reverse mortgages.
Commissioned by Bluestone Equity Release, the Trowbridge Deloitte survey found that 23 out of 24 leading dealer groups have a panel providing reverse mortgage products.
However, it was also found that further developments are required to assure all parties involved in the process that consumer and product design risks have been mitigated.
Over half of the respondents said they believe reverse mortgages will be an important financial planning tool within the next year or two.
Another key finding was that product quality and training were key considerations when dealer groups select a reverse mortgage provider.
“When asked to identify risks for the dealer groups with reverse mortgages, most nominated inadequate training leading to poor advice as the biggest risk.
“This advice relates to preparing a planner to appropriately explain the options available . . . and the ‘what if’ outcomes in the future for the client,” Trowbridge Deloitte partner James Hickey said.
He pointed to the preparedness of planners to explain the effects of compound interest and the interaction between loan value and changing property value, along with knowledge of key product features, as the most important areas to be addressed.
“The other advice risk identified for clients was the need for clarity on contractual obligations and a clear understanding of the effect of changes in client circumstances in the future, such as what happens if the client goes into a nursing home.”
The survey findings will be used to assist the industry to continue to produce appropriate training and support for financial planners interested in reverse mortgages.
Recommended for you
With an advice M&A deal taking around six months to enact, two experts have shared their tips on how buyers and sellers can avoid “deal fatigue” and prevent potential deals from collapsing.
Several financial advisers have been shortlisted in the ninth annual Women in Finance Awards 2025, to be held on 14 November.
Digital advice tools are on the rise, but licensees will need to ensure they still meet adviser obligations or potentially risk a class action if clients lose money from a rogue algorithm.
Shaw and Partners has merged with Sydney wealth manager Kennedy Partners Wealth, while Ord Minnett has hired a private wealth adviser from Morgan Stanley.
