Five Tips to Growing Your Reverse Mortgage Business in 2016

A lot has changed for reverse mortgages over the last nine months. From marketing the financial assessment as an advantage, to repositioning the loan as a financial planning tool rather than a last-ditch option, loan originators are certainly changing some of their ways in 2016.

Several professionals weighed in on the topic at ReverseVision’s UserCon conference last week, pointing to a new landscape and new sales tactics.

Here are five tips for growing reverse mortgage business in 2016.

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Consider new referral sources. The reverse mortgage has changed, and so has the client base. Those borrowers who may have qualified under the old rules may not qualify under the new ones. And their purpose for getting a reverse mortgage in the first place may have also changed, meaning that the referral base is also quite different.

“We used to go to bankruptcy lawyers, agencies on aging, and other places where people didn’t have a lot of money,” said Shelley Girodano, chair of The Longevity Task Force. “Our new client has assets that need to be preserved. We used to go where the money isn’t, now were going where the money is.”

A referral source not often used: relocation companies. Relocation companies may be able to connect originators with prospective reverse mortgage for purchase clients.

“Relocation companies work closely with real estate brokerages,” says Raymond Bartreau, founder and CEO of Best Rate Referral, a lead generation platform. “If you can explain to them [how a reverse mortgage works], this is an untapped market opportunity.”

Help financial planners. The financial planning community has long been targeted as a referral base, with the new product beginning to gain traction among some prominent financial planning thought leaders. But sending the right message to these financial planners is crucial. Help those planners help themselves by demonstrating the value of the reverse mortgage not only for the client, but for the planner.

“Financial planners are trained in the accumulation phase, but not in decumulation. Now they have a giant cohort retiring with nest eggs, but no one knows how to protect them,” Giordano says. “If they are being paid [as a percentage] of portfolio value, that value is going to decline. If the portfolio is protected, the planner is protected.”

Learn the new lingo. It’s important to not try to do the financial planner’s job when connecting with potential referrals, but also to be well-versed enough to gain credibility and trust.

New terms to know include “sequence of returns risk,” and “portfolio survival.” Learn the terms and how to use them.

“You must understand sequence of returns risk,” Girodano says. “Practice saying it. Another hot button [phrase] is survival of the portfolio, and the ability of housing wealth to buffer sequence of returns risk.”

Market where your borrower is. It sounds simple, but the borrower of yesterday may have different media habits and preferences from the borrower of tomorrow.

“You need to start looking at what your target demographic is,” says Darius Aram, vice president of marketing for San Diego-based mortgage company The Aramco Group, which has long been active originating and advertising in the reverse mortgage market. “What is the education level? What is the income level? What are they struggling with? If your clients are reading the paper, you need to hit them in the paper. If you can start the conversation by understanding who your target demographic is, you’ll be one step closer.”

Lean on research. In marketing to financial professionals, but also to borrowers, there’s a wealth of research that can help demonstrate the value of a reverse mortgage to a retiree’s investment portfolio.

“There is so much research,” Giordano says, pointing to studies by Barry Sacks, Jamie Hopkins, John Salter, Harold Evensky and Wade Pfau. “If you don’t know their names, Google them. Ask the financial planner, ‘What do you think about this study?’ They will teach you and let you know what is important to them.”

Written by Elizabeth Ecker

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  • Elizabeth,

    It is great to see your name again and read your writing. Welcome back. Jason has been doing a great job but you have been missed as well. I still miss reading John’s frequent contributions.

    RMD is growing and doing well.

  • There is a lot of good information in the blog above.

    It is important to share research as well as listening to the planner as the planner describes what his/her client base needs in the way of help. Most of all the planner needs to feel comfortable that the originator will not harm the relationship that the planner has with the clients that he/she recommends to the originator. Sometimes harm with the planner will come when doing nothing more than reaching a conclusion that the planner does not agree with but you do not know his/her position on the subject.

    There is one statement that is somewhat unnerving: “’If they are being paid [as a percentage] of portfolio value, that value is going to decline. If the portfolio is protected, the planner is protected.’” First even if the portfolio is protected, what kind of help is that really to the planner? It might save a few dollars in fees each month but should that be factor in the decision of the planner? It is almost as if we are chumming the waters where the prospect is nothing more than the catch of the day.

    If an asset managing is not prepared for the decumulation phase of retirement, what are they doing advising seniors who are in that phase?

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