Does Reverse Mortgage Marketing Need a New Approach?

When it comes to marketing reverse mortgages, celebrities have been the dominant vehicle to deliver the message to the masses and if it’s working, why change?  But with market penetration for reverse mortgages estimated to be around 2% of the eligible population, some feel the need for change couldn’t be more clear.

“The message in reverse mortgages has not changed over the years,” says Peter Klamkin, Vice-President of Affinity Marketing for Legacy Safeguard.  After spending years in the reverse mortgage industry, he sees an opportunity to have a different conversation with potential consumers.

“We talk about family values, personal history, being remembered, and leaving a lasting legacy,” he says of his current company. “Our livelihood of selling insurance has not changed at all, nor has the product, but our selling approach has.”

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Legacy Safeguard is a comprehensive network of services that are offered primarily through insurance companies like Mutual of Omaha, AEGON, but also sees an opportunity to work alongside reverse mortgage lenders.  “For a reverse lender, offering Legacy Safeguard, or a prescription benefit card, or something which keeps a name in front of a senior, builds a relationship, increases referrals, and softens the blow from having a monthly servicing charge,” says Klamkin.

By working with Legacy Safeguard, lenders can provide access to legacy planning software as well as discounts to major retailers and have a different discussion with customers.

Talking to Jean Noble, one of the people behind the development of the Senior Lending Network brand and a consultant to the industry, the problem is that the industry lacks marketing imagination and originality.  “HECM loans are mortgages of last resort because we market and advertise them that way,” she says.  “It is the virus that runs through the marketing and advertising veins of our industry.”

Reverse mortgage originators might not like the fact that celebrity spokespeople are driving many of the brands in the industry but Noble thinks this is part of the problem.

“To this day one can still read HECM originators calling former Senator Fred Thompson and Robert Wagner “shills” because they actually have the nerve to earn compensation from providing their image and voice to promoting and explaining reverse mortgages,” she says.  “Yet it is the imaginative celebrity marketing of Senior Lending Network that helped elevate our product to the heights we saw in 2005-2008.”

With a new product like the HECM Saver – which is being described as a way to reach past the needs borrower – it could be the opportunity the industry has been waiting for to re-invent its approach.

 

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  • There has been so much recent talk regarding past/current marketing practices and the marketing opportunities the Saver may bring…plenty of great insight from within the industry. But as an outside-the-industry independent marketer with strong knowledge of your products, industry and prospect segment – I’m witness to the never-ending (short term) “frenzy” associated with driving leads in the door. I’ve seen so few integrated marketing efforts that support the product, industry and individual company brand (from industry leaders through the top 50). Jean is right when she calls it a “virus”, but the answer may not be something as grand as a “reinvent” — but perhaps more subtle, charted steps to marketing using a methodical approach (yes, a strategy!) with a little bit of patience for measurable results. It pays off! Regardless of the introduction of the Saver, take some time and segment your prospects (house file and outside), message to the segments accordingly, look at what opportunities exist in the different acquisition channels, set aside “hold out groups” for realistic measurement, use custom models – they pay off if you have a strategy supporting them — the model alone is just a tool. How about “digital/social”? It better become part of your plan. Build your brand, the industry and value prop in each marketing touch, it doesn’t come at the cost of weakening your call-to-action/response. I’ve never heard so many Marketing Execs as those in your industry say they’re brand isn’t strong enough to leverage in their marketing. Everyone has a brand – the senior market will listen, engage and get behind it if you give them a true reason to believe. What a great time to be a marketer – and you know when it gets better? Everyday this economy edges in the right direction. Your regulators, the media, the marketing tools and channels are finally “getting your backs”. Get busy and start moving your company and your industry in the right direction.

  • Sometimes it seems we are reading different articles. mrtglogic21 is focused on methods and structure. Then this critic goes on to branding and selling. While that is OK, it misses the message of the article.

    While Peter seems to have a different agenda, his criticism of our message is right on point.

    However, the focus in this comment is on the ideas expressed by Jean. They are very important for our industry. While there are exceptions, the message of our marketing is — our products are for the desperate. Our message says — come to us as a last resort. Like some viruses, the one which runs through our industry has and continues to help us to some degree but we must learn it must be treated for what it is while keeping it intact and yet moving on. Some will argue that cannot be done but some of us believe it can and must.

    I would go one step further past where Jean went. We have a competent sales core who know how to use the message and marketing we currently have. (It is a genuine shame that some miss the value of celebrities. That style drove the growth in our industry precisely as Jean describes. The Jerry Orbach and Robert Wagner videos and DVDs did a better, considerably more professional, and competent job explaining the products than most of us ever could.)

    To reach the broader senior market we not only need a new message, we need a more sophisticated financial origination core to match that message. That is not to say we need to scrap what we have. It is still relevant and the current core of originators is generally doing a great job. BUT to reach a significant portion of the 98%, if we do not take a different approach with a different core of originators, our prior growth rates will be but a fond memory. Several industry leaders are saying the same thing.

    It is time to develop a new but separate message to reach the vast majority of seniors and train the origination core which will be able to carry it forward. Many will find this message deplorable but it takes a different sales force to sell cars to individual buyers than it does to sell fleets to Forbes 500 corporations. One sales group is not better than the other. Both are needed to make maximum penetration into the market but they are not the same and generally require different types of people.

  • Good morning, critic,

    Where are you planning on getting this new “core of originators” from?!?!?!!?!? Is there a job fair I am unaware of?? 😉 I hear you, but do not know of ANYONE who is entering this business now, and even fewer who will join us and create a new wave. I also like your comparison to fleet vs. individual car sales, interesting point to consider when looking at bank models vs. brokers.

    Here something to consider: It’s amazing what happens when you try to put the reverse out into the market as more than a “last resort”. I recently found a WF financial advisor on LinkedIn, had coffee, and explained the RM as a piece of an end of life plan. I have already had a meeting with him and one of his clients to go over the option. This is what you can expect if you educate sophisticated people that are able to see through the reverse media reports and find the VALUE that a RM can bring to a legacy.

    Now back to study time, I’ve got a test in 2 weeks on selling forward loans in order to stay in the industry that provides reverse!

    • Kevin,

      The NMLS is a big mess. But Florida, like Oregon, has always had an interesting emphasis on forward mortgages. I remember taking the Florida exam a few years back.

      There will be some who will be able to market successfully to both the desperate and the larger segment but if we cannot attract those into our industry who can help bring the product to the larger segment, then we will be stuck in a position not much different than we are today.

      No one has claimed this will be easy or that brokers will be able to absorb the initial costs. The term “professional gatekeepers” is being kicked around lately. This is the person who has nothing to sell but is expected to review the propositions into which the client is looking. This person is the neutral unbiased third party who analyzes the proposal and charges a fee for the advice. This group includes CPAs, attorneys, trust officers, and CFPs. Most of them are referred to as “deal breakers.” Not all CPAs, attorney, trust officers, and CFPs fit this category but many do. They are usually the least knowledgeable professionals when it comes to reverse mortgages.

      Those who can hold their own with gatekeepers and can begin breaking down those barriers will bring a different perspective to the senior community about our products. They will need to be conversant on subjects such as cash flow management, estate planning, and tax strategies. They will need to understand why reverse mortgages make more sense than other alternatives for obtaining cash. State laws will play a big factor in that discussion due to the relative special status of the principal residence in some states such as Texas. For example, look at where the top Enron executives put their cash as the Enron retirement plan fiasco developed and why.

      Our industry focuses on retirement or what I hear some financial planners refer to as post-retirement planning. Most of the needy/desperate fit this category. We are already reaching them to a large degree. Some have coined the term “…now let the house start paying you” which is right on point for a large segment of that group who have substantially paid down their mortgage. It is the more active senior and less risk averse upon which the comment above is focused.

  • >>“Yet it is the imaginative celebrity marketing of Senior Lending Network that helped elevate our product to the heights we saw in 2005-2008.”

    I credit Financial Freedom with being first. I remember when the James Garner commercial started appearing in 2005 … that single commercial made my life easier (I stopped hearing “isn’t that the loan where the bank gets your house?” as much). A few months later I was talking with a homeowner and he said he called me after seeing the commercial by Robert Wagner. I remember him telling me how he and his wife felt so much more comfortable looking into Reverse Mortgages after seeing Robert endorse the program.

    • Raymond,

      Who cares if it was FF or SLN? That is not the subject at hand but because you seem bent on discrediting Jean so that you make yourself look good and many readers were not in the industry when you and I came into it, I am replying. I am not a former SLN employee and have only met Jean once. Like you, she has no idea who The_Critic is and probably does not care.

      For months and months before Robert Wagner ever became the spokesperson for SLN, Jerry Orbach was the SLN spokesman. I still like his videos better than the older Robert Wagner CDs or DVDs even if they were not quite as “slick.” It was a result of his death and the request of his widow not to use TV commercials that featured Jerry that SLN engaged Robert Wagner. Anyone who was scarcely active in this industry in 2005 here in Southern California should know this including you.

      The James Garner and FF CDs and DVDs were not as good and I received complaints about them. I have heard they worked well on the East Coast but that is hearsay. At our firm the FF products never had the positive impact that the ones from SLN did. Rarely did I receive complaints about either the Jerry Orbach or Robert Wagner videos and CDs; however, they did have problems with delivery. In the summer of 2005, originators at our firm bought SLN leads and used them successfully. Even though we were correspondents with FF, we were not correspondents with SLN. FF never had the lead generation for their correspondents that SLN had for even non-correspondents in those days.

      Even your historical view of our industry is far too anecdotal and thus skewed. Experiences are far too biased to place strong confidence in claims which are based upon them.

  • I agree, my comments are a bit misaligned with the content of the original post but I start to trail off a bit when reading through it and the many others that speak to what your industry members should be doing re their marketing efforts (especially when they get to the part of promoting their company). My point is to focus on doing it right and to do so doesn’t take a “reinvent” or a massive “change” in the industry’s message. It takes some smart data strategy, a good media plan, targeted creative/messaging and a little patience and investment in testing. DRTV (celebrity or no celebrity) and mail are fantastic channels for this audience. Needs-based (last resort?), Saver prospects, Financial Planners, Care Givers, Boomers…whomever the target audience — segment appropriately and market to them based on their individual needs while empowering the industry, products and of course – your company and individual brand.

    • mktglogic21,

      As to firming up our current and future marketing efforts you are exactly right. But many of us believe that the industry is too focused on one group of seniors and one group alone.

      At an individual originator level, your points are well taken but at an industry level they are not. As an industry even those who use a more disciplined and thorough approach have failed to reach the larger segment to any degree at all.

      When an industry finds itself in that situation, it must address the issue or be stuck in the same grind until change comes or it will not experience the growth it needs. No one is saying that the current message is not relevant at all but it is not relevant to the larger segement and we need to find out how to reach them.

  • Well, the messengers have a limited marketing impact. The message itself requires the kind of public familiarity and acceptance that limited marketing strategies will be hard pressed to achieve. To counteract the residual negative image, what we need is for the FHA to follow through on what various officials from the agency have told NRMLA audiences they want to do which is to create a government sponsored national campaign. Much like other public policy campaigns, the federal government’s ability to further legitimize and establish reverse mortgages as an important resource is the single most important way to get the message out. All the ‘smart’ media in the world isn’t going to lift the program to another level and erase years of negative publicity.
    To have gone from 1-2% penetration in five years should be all the proof required to illustrate that the industry is in sore need of a game changer.

  • Does Reverse Mortgage Marketing Need a New Approach? Of course it does.

    And here’s how. Insurance providers, lenders, financial planners, and other related service providers could beat down the doors of HUD, FHA, and Ginnie Mae demanding a Home Equity Conversion Mortgage package for 429,000 stock cooperative owner-occupied dwelling units nationwide.

    As most know, stock cooperative HECM packages were prescribed in the original Housing and Economic Recovery Act of 2008, signed by George W. Bush on July 30. However, co-ops were mysteriously removed from later 2009 housing legislation. Let me tell you what this means to many stock co-op owners in my community. You may verify information about our community by visiting Laguna Woods Village Southern California Retirement Community at http://www.lagunawoodsvillage.com/.

    We are a community of 18,000 residents in some 12,500 dwelling units, of which 6,300 are owner-occupied stock cooperatives. Of those units some co-ops are located mere stones’ throw from condominiums of the same design with the same square footage, all with similar landscaping. Just go the website and see for yourself.

    Yet while their condo neighbors have choices for purchasing an FHA-guaranteed HECM, their co-op counterparts aren’t so fortunate. HUD canceled the former Home Saver co-op reverse mortgage offering after passage of the 2008 legislation. Since then co-op owners have had no opportunity to reach the equity in their homes through a federally insured mortgage package.

    Because of this situation, some property owners aged 62 and older are now vulnerable to losing their homes. These are dwelling units worth many thousands of dollars. My own two bedroom townhouse, estimated 1,500 square foot co-op, once had an purchase offer for $3,790.00. Many co-ops, as has mine, have been substantially renovated. They have been brought up to 21st Century housing standards with granite countertops, stainless steel appliances, new flooring, and much more.

    Co-op owners feel there must be something wrong with this picture. We have had contacts from many lenders inquiring when HUD is going to provide a co-op HECM package. Over fifty from our group petitioned the HUD secretary for a date last July. A HUD official responded in a letter: “Soon.” It has become abundantly clear that there is no HUD imperative to take any action whatsoever.

    Thus it is incumbent on those who have the power or influence to demand a HECM package for co-ops. And as far as marketing goes: There are plenty of co-op owners who could testify regarding their financial hardships in this economy and the resulting impact failure to have access to their home equity is causing them.

    BARBARA B. HOWARD ChangeManager@comline.com • Cofounder HECMs for CO-OPs GROUP at Laguna Woods CA • http://ChangeManager-ADR.net/ • 949 855.3990

    • Barbara,

      In one comment you asked that I email you directly. I did, with no response.

      To what 2009 legislation are you referring? We all know about the inclusion of co-ops into the eligible statutory classes of homes through the 2008 legislation referred to as HERA but 2009 legislation?

      As to the value of your home, did you mean $379,000? You only show $3,790 (excluding pennies). What the values once were has absolutely nothing to do with the HECM program today. As you well know, your complaint has to do with the fact you do not own real property but rather personal property. HUD is still having difficulty trying to sort out how it as the insurer and guarantor can work out security issues in some way which is acceptable to all parties.

      Again I wish the Laguna Woods co-op owners would have made the condo conversion a few years ago when values justified the switch. The owners knew the risk of not being eligible for HECMs back then when they rejected it. It is that inaction which still plagues you to this day.

      It is not HUD which did away with the reverse mortgages which were placed on co-ops in Laguna Woods. They were Fannie Mae Homekeepers; Fannie Mae dropped their experiment into Homekeepers for Laguna Woods co-ops even before HERA was passed. Fannie Mae stopped the creation of new Homekeepers altogether at the end of 2008. The co-op owners in Laguna Woods were very fortunate that Financial Freedom went to bat for you back then. You were the only co-op project in all of California to have those products offered according to many sources. It is too bad more co-op owners did not take advantage of them back then. Talk to rainmand about those days.

  • Why the other 98% is unreachable…
    Our industry 2% market penetration is driven by our need based client or last resort mindsets (borrowers and their advisers).
    The government and major financial planning institutes “Forbid” discussing the reverse mortgage as a funding source to meet estate planning needs, regarding such conversations as grounds for termination.
    Under these current circumstances and constraints, the 98% marketplace is a pipe dream.
    Donald

    • Donald,

      Your remarks surprise me.

      Employers have the right to make such demands on their employees but not large financial institutions unless they are your employer or you are their correspondent. There is no such governmental prohibition.

      There are members of our industry who get unnerved any time there is any discussion about HECMs which exceeds their stated statutory purpose. Yet members of FHA and HUD have expressed a far more expanded role for HECMs particularly in the discussion of Savers. Even former Commissioner Montgomery expressed some of those ideas.

      What we are forbidden to do is cross-sell. If you are complaining about cross-selling, forget it; it is what it is.

      If you are trying to charge a fee for estate planning besides the origination fee, yes, there is a strong prohibition against that. Even I would caution you not to discuss such matters with the client but defer to the professional they use for such purposes and discuss your concerns with that individual.

      Please point out the governmental concern you have. A lot of people have very different views but if HUD or FHA have policy on point or there is statutory language on point, please cite it.

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