Financial Professionals Believe Reverse Mortgages to Become Big Growth Area

New research conducted by LV= found that financial professionals believe reverse mortgages are set to become a big growth area for their business.

Using information gathered during its road shows in the United Kingdom, nearly all (98%) believe there will be a surge in consumers using equity release products over the next few years. In fact, 35% of the IFA (Investment Financial Advisors) that attended said the product is already a core part of their business.  Financial advisors said a shortfall in pension provisions will be the driver behind the growth.

”Advisers can clearly see the importance property will play in people financing their future in and around retirement, and a large number of IFAs now class equity release as core to their business,” said Vanessa Owen, LV=’s Head of Equity Release.  “Releasing the money locked in a home can, under the right circumstances, be a lifeline for cash poor, asset rich people in or at retirement.”


When looking into long term care planning, 88% of IFAs indicated that they believed, in the right circumstances, equity release could be the best option for people needing to fund long-term care in the home.

Andrea Rozario, Director General of equity release trade body SHIP said it isn’t surprising that advisors believe in the future growth of equity release products considering the longevity issues we face and the problems this brings.

“Clearly the shortfall in pensions, along with an increasing need to pay for care in later life is becoming more important for the consumer and turning to their biggest asset, often their property is a logical step,” she said. “The use of this asset can help alleviate problems for customers as long as they are fully aware of all the options open to them and this is where advisers play a critical role.”

The results from the LV= survey show that financial advisors from the UK have a different outlook on reverse mortgages than their counterparts in the United States.  Most financial planners see the product as a last resort, not as a retirement tool.

“It is still the Wild West, but over time, I believe competition and/or regulation will help reverse mortgages,” said Barry Glassman, president of Glassman Wealth Services LLC, a $300 million advisory firm during an interview with Investment News.  However, his outlook is far more positive.  “Until recently, reverse mortgages seemed like desperate measures, but they will become as common as immediate annuities,” he added.

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  • Before becoming overcome with joy, it is important to note — as Admin did — that the survey was taken from among IFAs in the UK. They are hardly solicitors or chartered accountants. In fact they are finding difficulty in locating a market for fee only investment advice. I am sure we would find reverse mortgages much more readily accepted by insurance and securities sales people than most CPAs and attorneys in the US as well.

    If you carefully listen to those who advocate social media marketing, it seems one should stop doing everything else until one is fully immersed in that media. Listening to those who advocate ecommerce, we all should shut down until we have our website fully operational with an online easy-to-use million dollar calculator. Now we come to those who are sold on the concept of marketing to “professionals” and you would think there are thousands if not tens of thousands of CPAs and attorneys out there just waiting for the latest reverse mortgage originator to speak and they will immediately recommend that their clients go see this originator to get a reverse mortgage.

    There are no short cuts. There is no single way. Acceptance of our product has proven difficult and will continue to do so. However, for once we have a product that answers the question of high upfront costs but does so with less available proceeds and higher annual MIP. Will that work?

    There are many more positive signs now than just six short months ago. We need to turn them into increased sales and just as importantly, into opening up new sources of business. While things are not as positive as late 2006 when the industry had just about the same volume the prior fiscal year, the volume was on an upswing and one just had to ride the wave; however, there are also definite similarities. In mid November 2006, we were told of the addition of a second proprietary product entering the market with a lower margin forcing the only proprietary provider to lower its margin by 1.5% (exactly 0.1% lower than the new product). There was talk of changes to HECMs on their way. Back then the momentum was up and upbeat. Today we must pick ourselves up and create the momentum up.

    Will we see similar acceptance in the US as in the UK? More and more seems to be saying “yes.” It is now our turn to make it happen. The only question is will we do it?

    • I only hope our CPAs are faster learners than those across the pond. My experience is that they are slow to accept new ideas, concepts and products.
      Bon chance.

    • oldguy49,
      Will reverse mortgages ever stimulate the business of a CPA sufficiently to offset the risk of advising clients to obtain a reverse mortgage? It is doubtful if even 1% of all CPAs will ever see even one reverse mortgage taken out by their clients.
      There are far more licensed active CPAs in California than the total number of reverse mortgages endorsed all of last fiscal year nationwide. The number of active real estate licensees here in California alone exceeds the total number of reverse mortgages endorsed last fiscal year by several times. The total student population of just high schools and colleges within just six miles of my house alone is almost twice the total number of HECMs endorsed last year. If numbers like that do not put the insignificance of our industry into perspective, then there is not much which will.
      If you believe that reverse mortgages will ever significantly stimulate the business of CPAs in this country you are a much better dreamer than I. The practice of a CPA is at great risk if a CPA recommends a reverse mortgage and the borrower losses the home due to covenant violations other than sale. Until we understand the risks to the referring parties, we will always be talking a much better game than we could ever play.

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