Changing the Reverse Mortgage Course With Financial Planners: A Fine Line

Reverse mortgage originators may be aware of the recent research conducted by financial planners that reported favorable findings on the use of the loans in retirement, but working with financial planners to make them aware of the research and address the use of reverse mortgages is still a challenge for some. 

The research, published in two separate articles in the Journal of Financial Planning, indicates reverse mortgages help preserve an individual’s investment portfolio. But telling financial planners about the research and deterring them can present a fine line. 

One important factor is not trying to provide all of the information, says Shelley Giordano, director of business development for Security One Lending. In her work at S1L, Giordano spends time and effort making connections with financial planners and working with originators to do the same. 


“We don’t get anywhere by pretending we have all the answers,” she says. “But we can get somewhere if we start a conversation with financial advisors. They have everything to gain by making the client’s retirement portfolio last longer.” 

Recently, originators have reported a marked difference in conversations with financial planners, possibly due to better press on the reverse mortgage market, or to the new uses of reverse mortgages that are being considered today. 

“Reverse mortgages have increased in popularity I believe primarily due to increased public awareness resulting from the marketing efforts of several major banks,” says financial planner Roy Laux, of Synergy Group. “I think there has been a change,” he says. 

But many planners are still not aware of new research published recently in the Journal of financial planning, or haven’t gone through it in detail. 

“To get us to see a sea change it is going to take a long time, but I do think the industry as a whole is starting to make inroads with more forward thinking financial planners, as evidenced by the two investigations in the Journal of Financial Planning,” Giordano says. 

That change has everything to do with the approach to working with financial planners and showing them the benefits a reverse mortgage can have for their client, and also for their own business. 

Rather than try to convert financial planners, ask questions, Giordano says. 

 “Pointing out that ‘there have been some pretty prestigious papers published this year’ would strike the financial advisor as credible,” she says. “Rather than telling them how to do their jobs, it’s more effective to seek a give and take conversation around the role of home equity in the retirement distribution phase. They may never have thought about deploying home equity because they have believed that the HECM is too expensive, rather than a possible vehicle for wealth preservation.” 

Written by Elizabeth Ecker

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  • The real challenge is the attempt to redirect a sales force which by and large does not understand the value of adjustable rate HECMs (or Savers for that matter) into a sales force which can successfully and quickly help competent and sophisticated financial planners integrate HECMs and other reverse mortgage products into their client recommendations.  Two articles in the Journal of Financial Planning helps but will not change the minds and understanding of an industry much, much larger than our own.

    Individuals trained in understanding fundamental needs and helping the most needy among senior homeowners are probably not among the best to meet with financial advisers; this is especially true for those whose principal experience in the industry is selling fixed rate HECMs. The “educating” methodology is hardly the tact which should be employed in this form of marketing.

    For two years it has been argued that a new dedicated sales force is needed,  one which understands cash management.  Selling on the greed of the advisor is hardly a style which should be permitted to endure.  

    Telling an asset manager that having the client take out a fixed rate HECM because the cash can be used to increase the asset base upon which their income is based is hardly the ethical standard this industry should respect, encourage, or tolerate.  It sounds like the latest “good idea” of unethical used car salespeople.

    Without a different type of sales force dedicated to working with financial planners, the process will be slow and arduous.  Our endorsement numbers tell the story and will continue to tell it.

  • I’m originating one now for a Financial Adviser, and he’s blown away by how the credit line works.  His goal is to pay it down by an additional $500.00 every month, to reduce interest and build the credit line, and he’s telling all his friends and neighbors about it, and told me all Financial Advisers would sworm to me once I explained to them how it works.  I said I’ve been there, done that, and it’s not that easy.  In my experience, the only Financial Adviser’s who “get it” are the ones who research the program for themselves, not their clients.  Its got to impact them personally first.

  • Amen! This boneheaded gold rush approach of “Hey, we’ve got a great new source of annuity premium for you to use!” was a principal contributor to the criminal penalties imposed by the McCaskill amendment in HERA of 2008. Reverse mortgage referrals from planning professionals will come from how well you can make a reverse fit into an existing plan and portfolio; how well you can use it’s strengths to support the shortcomings of other accounts and investments and assets and how those other elements help mitigate the potential “cons: of the reverse. 

    No slam-dunk marketing here because, as any builder will tell you, remodeling is always slower, trickier and more difficult than new construction.

  • Well put Mr. Peters. Very well put.

    But quite frankly I’m not seeing any “bonehead gold rush approach” by any major reverse mortgage entities.

    Here in Security One Lending we are choosing the very top of our origination staff, who want to commit to this very specific market, to be specifically trained to deal with financial advisors.

    Right now we are also offering 2 CE classes to CFP’s. The first, Reverse Mortgages-Myth vs. Reality and the second class specifically on the purchase reverse mortgage.  

    A third class was just approved that will be centered upon the recent Evensky/Salter studies and is being finalized right now.

    These classes are approved in 50 states for CFP’s and been very welcome by FPA on a national basis.

    We’re seeing a fundamental shift in our industry right now from a very needs based “product of last resort” to a valuable retirement planning tool and I’m loving the change!

    • Michael,

      When industry wide production is at the lowest it has been in years and the endorsement picture for this fiscal year looks to be less than half it was less than five years ago, something better be happening.  

      Will CE courses be the trick?  While that MIGHT help with CFPs and a few others with prestigious initials after their names, most “financial planners” and “financial advisors” have no need for those hours.  There are millions of Realtors who need CE, not so with “financial advisors” and “financial planners” but on the other hand there are more than enough to occupy the time of the industry origination core.  

      Will the new effort outside of insurance and banking dominated enterprises work?  Or will we see the farm fields spoiled due to improper “farming” techniques (approaches)?   

      While this is a good start for S1L, it is a very, very weak one for the industry as a whole.  It reflects the efforts of MetLife.  S1L should carefully consider what it should and should not modeling its efforts after.  MetLife is not in this space anymore.  What Albert Einstein once stated about human sanity applies to business sanity as well:  “Insanity: doing the same thing over and over again and expecting different results.”

      We will all be looking for the endorsements at S1L to soar due to HECMs for Purchase and Savers endorsements despite the downward trend of endorsements generally.

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