New research released by Nokkel and FNZ, conducted by the lang cat, found 93 per cent of UK financial advisers believe property wealth should be incorporated into financial planning, particularly in the context of retirement income planning.
Currently, property equity is minimally integrated into financial planning in the UK, with only 22 per cent of advisers providing related services.
This insight into adviser attitudes comes as millions of people face a retirement savings gap.
By integrating Nokkel’s property solution into FNZ’s global wealth management platform, financial institutions in the UK can offer customers a more holistic view of their entire asset portfolio, helping them make better financial decisions.
The full research report can be found here.
London, 18 September 2023: Today Nokkel, the house wealth and fintech platform, in partnership with FNZ, the leading global wealth management platform, reveal new data on the growing importance of house wealth to financial advisers in the UK. The research, conducted by the lang cat, finds that 93 per cent of financial advisers believe property wealth should now be a key consideration when giving financial planning advice. Further, more than nine-in-ten advisers believe retirement advice specifically, should include property wealth.
The findings come amidst the growing trend of insufficient savings among many current and soon-to-be retirees. The Pensions Policy Institute’s 2021 report, What is an adequate retirement income?, found that five million people were headed for retirement without adequate pension income. This has since been exacerbated by the UK’s cost-of-living crisis and high interest rates. Financial advisers are considering how they can further support clients on their financial journeys by driving awareness of the increasingly important consideration of house wealth.
The research reveals that almost every adviser interviewed gathers housing wealth information as part of the fact-finding process of advice. But while housing wealth information is viewed by advisers as essential to building a holistic wealth picture, it is used inconsistently (if at all) for wealth gains. The advice industry needs to change its outlook and make house wealth considerations a key part of retirement planning for clients.
For example, the research shows few UK advisers are currently integrating home equity solutions into financial planning services. Nearly half of all advisers refer their end-investor clients to an external resource for home equity release and 31 per cent do not consider home equity release at all. Only 22 per cent of advisers are managing it themselves within their current systems, despite the benefits that improved visibility of their assets would bring consumers.
Why this contradiction? The data suggests that advisers do not have ready technologies available to integrate home equity solutions into their overall offer. One-third of advisers believe their wealth management firms could offer a solution but have not, while 17 per cent think there is no integrated solution available.
FNZ invested in Nokkel in 2022 to integrate their market leading property solutions into its global wealth management platform. By integrating Nokkel into the FNZ platform, financial institutions in the UK can offer customers a more holistic view of their entire asset portfolio and access a set of informative tools – providing a wider range of people with a deeper understanding of their entire net worth and helping them make better financial decisions.
Roland Whyte, Founder and CEO of Nokkel comments: “House wealth needs to become more of a focus for advisers when they plan for clients. Especially in light of the now-live FCA Consumer Duty and the upcoming Retirement Income thematic review, which will only make house wealth more relevant to financial advice.
But accessibility and data transparency are key to making this a worthwhile end-client experience. Modern technology – that easily integrates with advisers’ platforms – will need to be matched with reliable data. Then automated insights become a possibility. This is particularly important when considering financial solutions that have historically lacked transparency and advice, such as equity release.”
The research also examines how advisers factor house wealth services into their overall fee structure. Once a suitable and reliable solution is in place, the research found that 81 per cent of advisers believe an advice fee is warranted on house wealth-related solutions.
Whyte adds: “Finding the right fee structure for house wealth services is not straightforward. It will largely depend on the individual client and how they intend to use their property wealth in retirement. The main point here is that delivering solutions that incorporate house wealth during retirement deserves a fee.”
Alastair Conway, Chief Executive Officer, UKMEA of FNZ, confirms: “The research highlights the importance of property when it comes to opening up wealth advice to a wider audience. For the service needs of financial institutions, insight on house wealth is essential to have a holistic view of clients’ financial situations to offer better solutions for their needs.”
Given the increasing retirement income gap, it’s difficult to see a world without property wealth being considered as part of an overall retirement solution. Our partnership with Nokkel allows us to integrate property related solutions, such as equity release, with an appropriate advice layer which historically has been missing.”
Mark Polson, Founder of the lang cat, added: "It makes no sense to not build housing wealth into a client's financial plan. The industry is still too siloed in this regard, though it is better than it used to be. Historically, the regulator has also had a blind spot for housing wealth, however as the recent retirement income review has shown, this is now changing.
There is an obvious and increasing need for people to draw on housing wealth in retirement, so it is great news the fintech sector is developing solutions to meet this need."
A copy of the research paper can be found here.