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. 

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“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