Brokers could increase the value of their firm by around £760,000 by adding later life advice to their business mix, even if they only take on 25 cases per year, new analysis suggests.

The report, by equity release platform Air in conjunction with research consultants Tony and Philip Wickenden, helps advisers to weigh up whether to refer later life lending clients to specialist advisers or to set up their own in-house advice capability.

It estimates the set-up costs for building an in-house service are around £21,740, compared to around £4,500 for establishing a referral partnership with a specialist.

Air calculates it would only take around eight completions to break even on via the in-house route or between three and six via referrals.

However, Air says expanding into later life lending does not need a new division, just a structured investment of time and capital to put the right qualifications, templates and governance in place.

It says that keeping later life advice in-house will deliver maximum long-term value as firms earn advice fees and full commission.

However, referrals can be the more pragmatic path, particularly to begin with.

Starting with a referral scheme enables firms to gather management information and evaluate customer experiences safely, before deciding whether it makes sense to move the advice in-house.

But Air says that clients benefit from both options, although advisers should carefully consider the compliance implications before deciding. 

Technical Connection founder and co-author of the report Tony Wickenden says: “The commercial opportunity here is real, but it only works if the client outcomes are right first. 

“The firms that will benefit most are those that build a repeatable, disciplined process: clear alternatives, plain-English cost explanation, documented understanding.

“That is what protects the client, protects the adviser, and makes the revenue sustainable.”

Air and Key Equity Release chief executive Will Hale says: “Later life lending has moved from a niche consideration to a mainstream planning conversation and the commercial case for building the capability has never been clearer. 

“But the firms that will see those returns are the ones that start from the right place: genuine client need, transparent explanation of costs and trade-offs, and robust documented understanding before any decision is made. 

“When that foundation is in place, advisers aren’t just unlocking a revenue line, they’re deepening relationships across generations in a way that compounds in firm value over time. 

“At Air, our goal is to equip advisers with the insight and tools they need to establish productive referral relationships where appropriate and to deliver confident, client centred advice in a fast-moving environment.”

Damon O’Connell, Director, Key Partnerships said: “The preferred starting point for many advisers wishing to enhance customer lending choice in line with their Consumer Duty obligations is to establish a strong referral relationship with a later life lending specialist. 

For some advice firms who see a clear market opportunity and strategic rationale to broaden their lending proposition beyond its core business, then developing an in-house proposition can be the right route – but it should be approached with careful consideration. 

At Key Partnerships, we work with many advisers that choose a hybrid approach: writing some business in-house while continuing to refer specific cases. 

“This is often for lower-value, more complex, or time-intensive cases that can place a strain on internal resources and distract from the core business lines that drive the majority of a firm’s revenue.”

Air is running a series of webinars, which include targeted sessions for financial advisers, mortgage and wealth advisers, with details of how to sign up on its website.