When shopping for equity release schemes online you might think it would be better value to go direct to the lender. It only seems logical that cutting out the middleman must cut out the costs that will come to you in the long run? We see adverts on television all the time from companies telling us they are cutting out the middleman and passing the savings on to you, the customer. But is this actually the case?
Going direct is not always the way to go when it comes to seeking advice about any service, especially equity release. And since you are legally obligated to seek advice before signing up to any such schemes, you do not have the option of going it alone.
The costs of direct sales
As of 1st July 2013 Aviva will no longer be offering their equity release advisory service. While they will still be offering their equity release schemes as a lender, they will only be accepting business through an independent broker, such as ourselves at Equity Release Supermarket.
The hard facts of economics mean that there are costs included in direct sales that will eventually be passed onto you. A direct sales force comes with large overheads that the company has to reach. Compliance support, large salaries, bonuses, car allowances, commissions, phones, and pension schemes all increase the overheads of any direct sales team. All of these costs need to be paid for somehow, and the company has to do this through the only way possible – the plans themselves!
This is why there is such a price differential between getting your deal direct through Aviva than going through an independent broker, such as Equity Release Supermarket.
How does going to an independent adviser benefit you?
Aviva have always offered excellent equity release schemes and advice through their own tied advisers, but through an independent broker you can be offered a wider range of all the deals that are available and find the one that is the best fit for you. The changes in the market over the last decade have shown that more and more people have recognised that independent brokers are the best value option to get their equity release deals.
No direct sale obligations
While the Aviva advisers were tied to their own products and services, sites such as Equity Release Supermarket are free to advise you of a far larger range of equity release scheme options.
When going to Aviva Direct, while their advice may have been top notch, when they offered you their deals you would have had no other options but their own. That meant that Aviva had no incentive to keep their rates down. Going through ERSupermarket means that you are being shown the entire open market option. If Aviva want to keep their business then they have to stay competitive.
This is the biggest advantage you gain through an independent broker: market comparison. Aviva have always offered better rates on business they acquired through independent companies, as they were forced to stay competitive. When comparing the rates you could get on identical deals, one taken direct and the other through ERSupermarket, there could be a difference of a whole 0.5%. This might not seem that large, but when it comes to interest rates, that builds up to a large and costly number.
The market has changed to benefit the customer
This is why the market has changed in the thirteen years since Equity Release Supermarket started business. While a decade ago independent firms made up only 20% of the equity release market, today that has risen to 80%. And with the closing of Aviva Direct, the final firm to offer direct sales, that change is now fixed. Customers have recognised where they can get the best deals.