Survey of Financial Planners Reveals Need For Reverse Mortgage Dialogue

More than half of Certified Public Accountant (CPA) financial planners say running out of money is a top retirement concern for their clients, a new survey by The American Institute of CPAs (AICPA) finds.

And while the survey takes note of annuities and Social Security as sources of stable income in retirement, no mention of reverse mortgages underscores a need for increased dialogue between the reverse mortgage and financial planning industries, says Certified Reverse Mortgage Professional Beth Paterson, executive vice president of Reverse Mortgages SIDAC.

Sixty-six percent of respondents said that up to 25% of their clients utilize annuities as an investment or income vehicle for longevity, according to the AICPA Personal Financial Planning (PFP) Trends Survey. Regarding Social Security, 63% of respondents said 50% or fewer of their clients had discussed benefit maximization strategies with them. 


“Reverse mortgage professionals need to be approaching financial planners, CPAs and educating them about how a reverse mortgage can help people with their long-term planning,” Paterson says, adding that for many senior homeowners the financial tool assuages concerns of just what the survey points to: running out of money. 

Seventy-nine percent of CPA financial planners ranked running out of money among the top three of clients’ concerns, with 57% identifying it as the No. 1 concern, according to the AICPA survey. Notably, many of the CPAs surveyed work with worth with high-net worth individuals, AICPA says.

The survey, which includes responses from 548 CPA financial planners, was fielded from Feb. 3 to Feb. 26.

“With all of the financial uncertainty surrounding retirement, running out of money is directly tied to a number of issues that high-net worth clients are juggling simultaneously,” says Lyle K. Benson, CPA/PFS, and chair of the AICPA’s PFP Executive Committee, in a statement, adding that CPA financial planners integrate tax planning strategies to maximize income in retirement.

Fueling clients’ financial and emotional stress about outliving their money are healthcare costs (76%), market fluctuations (62%) and lifestyle expenses (52%), CPA financial planners say. Additional causes for financial stress were unexpected costs (47%), the possibility of being a financial burden on their loved ones (24%) and the desire to leave inheritance for children (22%).

Reverse mortgages are one tool seniors can use to afford their health care costs, make home improvements, travel and more, Paterson says.

“We in the industry need to do a better job of educating financial planners and the public,” she says, noting that many financial planners and CPAs adhere to the stereotype of reverse mortgages as a “last resort.”

“What we in the industry can do to change that [negative perception] is reach out to financial planners, CPAs and educate them as to how reverse mortgages can be used for long-term planning,” she says.  

Written by Cassandra Dowell

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  • While the survey of these CPAs (and CPAs only) who have a significant practice in financial planning brings out important perceptions of a sample of those CPAs, the reaction from our industry displayed in the article shows how little some understand the survey and its conclusions.

    Reverse mortgages are debt and do NOT produce income to borrowers (except to the limited extent that lenders might forgive the balance due). So how in the world can a reverse mortgage ever be a source of stable income? Annuities are intangible assets and the right to receive benefits from Social Security is a theoretical intangible asset. Both produce cash inflow (and potentially income) to their related beneficiaries.

    When a reverse mortgage has been paid in full, the reverse mortgage has produced NO income to the related borrower. Unlike assets which produce income, proceeds paid out to reverse mortgage borrowers increase the balances due on their respective reverse mortgages. Income is earned or imputed while debt proceeds are borrowed. Income generally do not have to repaid, while debt proceeds do.

    CPAs have been imprisoned for fraud for allowing their clients to treat cash received from debt as income. In fact Arthur Andersen all but came apart due to lawsuits over just such treatment on the financial statements of Enron.

    So why would we expect any CPA to classify reverse mortgages as sources of stable income to their clients? Perhaps before trying to “educate” CPAs on reverse mortgages, we need to learn what they are in financial terms then maybe we can school others. Perhaps the problem we have with the survey is that those who created the survey ignored the use of reverse mortgages by clients altogether. Such a reaction would be natural for our industry; it is certainly my reaction to it.

    (The opinions expressed in this comment are not necessarily those of RMS or its affiliates.)

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