Reverse Mortgages on the Verge of Financial Planning Breakthrough?

An article published Wednesday in Financial Advisor magazine demonstrates the way in which a reverse mortgage can preserve the portfolios of retirees who have investments. On the heels of another recent article written for financial planners on the same topic, it is beginning to sound like a sea change for the reverse mortgage industry and its work with financial planners.

Featuring an interview with nationally-recognized retirement expert Harold Evensky, the Financial Advisor article details the Saver option for use by baby boomers who are planning for retirement.

“I’m reasonably positive [the Saver] will become an important part of our planning in the future,” Evensky told the publication.

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Evensky and colleagues at Texas Tech have worked on a yearlong study on the use of reverse mortgages in retirement planning that is expected to be published soon. In speaking with groups of financial professionals about the research, Salter told RMD he has received positive feedback from the planning community. In the meantime, Evensky says the studies indicate that use of the reverse mortgage Saver product will significantly increase the survivability of a retiree’s portfolio in retirement.

Statements from those like Evensky, who are highly regarded in the financial planning community, have the potential to reach an largely untapped market. And some lenders may already be seeing an immediate benefit.

“We have already begun to market to the younger demographic, and this article has strengthened our message,” says Mike Gruly of 1st Financial Reverse Mortgages. “The fact that the message comes from a respected member of the financial planning industry instead of the lending industry itself attracts more serious listeners, and is creating more serious dialogue.”

The dialogue is something originators have long worked toward, but have seen little success with as recently as late 2011.

Numerous financial planners told RMD in September that they either didn’t know enough about reverse mortgages to recommend them to their clients, or that outdated information about reverse mortgages was drawing them against the loans as a retirement tool.

Today, however, the conversation has a different tune as originators have research with data to back up the idea of marketing to younger borrowers who have greater savings and higher home equity.

“This offers different possiblities but for a different customer, and a customer who might be amendable to a financial planner,” financial columnist Scott Burns told RMD after writing about the Sacks and Sacks research.

The Saver is a win-win for retirees, Evensky told Financial Advisor magazine.

“When markets regain their strength, the mortgage can be paid back,” Evensky told Financial Advisor magazine. “Our studies indicate this will significantly increase the survivability of the portfolio in retirement.”

Written by Elizabeth Ecker

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