With new reverse mortgage principal limits potentially bringing a significant drop in demand among prospective borrowers, the marketplace is set to become more competitive in 2018. And as the new year approaches, lenders and independent originators may be thinking about ways to shake up marketing plans in the coming months.
Earlier this year, a pair of senior marketing experts spoke at the National Reverse Mortgage Lenders Association’s annual conference in San Francisco. Their message: As the national cohort of seniors grows larger and more diverse demographically, it’s time to shake up Home Equity Conversion Mortgage marketing strategies.
Here are five key takeaways from the discussion, conducted by Mary Furlong — founder of longevity marketing consultancy Mary Furlong & Associates — and Lori Bitter, founder of market research firm The Business of Aging.
Tailor your message to an increasingly diverse audience. Back when Home Equity Conversion Mortgage lenders were strictly working with the World War II-era “Greatest Generation” or seniors, marketing was relatively easy because tailoring messages to different subsets wasn’t a necessity.
“They were very homogenous,” Bitter said. “They were white, they were thrifty, they were patriotic.”
But the baby-boom set is certainly more fragmented in terms of race and ethnic backgrounds, as well as age brackets: For instance, more and more baby boom grandparents are supporting adult children and younger grandchildren within their own households, further complicating marketing messages surrounding HECMs.
“We don’t get to talk to them like they’re all old while people,” Bitter said.
Authority figures are out. Paid spokespeople have long been the cornerstone of the HECM marketing landscape, from Robert Wagner to Fred Thompson to current American Advisors Group pitchman Tom Selleck. But baby boomers are far more likely to trust internet sources or their peers, Bitter said, making word-of-mouth and online resources that much more important — “which is a little bit scary sometimes,” she noted.
Major players in industry have already shown signs of moving in this direction: Earlier this year, One Reverse Mortgage launched its first ad campaign since the recent departure of spokesperson Henry Winkler, which focused on reminding boomers of their shared past and retirement future — with no spokesperson appearing on screen. Reverse Mortgage Funding, meanwhile, featured a blind “taste test” of the reverse mortgage against a home equity line of credit, with real focus group participants extolling the virtues of the HECM product.
And even AAG CEO Reza Jahangiri hinted at an expansion of his company’s marketing efforts beyond Selleck in the future.
“I love Tom Selleck. I love our current advertising,” Jahangiri said in a separate panel discussion at the NRMLA conference. “But our current call-to-action model that focuses on the needs-based borrower — that has to change as well if we want high penetration.”
Make connections to other industries. Older folks who might benefit from a reverse mortgage might not necessarily go to the product first, so it’s important to connect your message to other aging services, Bitter said. These can range from home modifications for people dealing with new disabilities to house-cleaning services for seniors considering a downsize.
The key, according to Bitter, is to look at it like a crime investigation: Every potential customer has a motive and an opportunity, and they’re more likely to act on that opportunity if you can solve a problem.
“Your product may not be at the top of the list that they’re thinking about,” Bitter said. “There’s just a lot of head space been used up by a lot of the relationships. But the good thing about these life-stage changes is that every single one of them creates a unique customer moment.”
Prepare for the coming digital wave. The oldest members of Generation X are 53 years old — still nine years away from HECM eligibility, but proof that the industry will soon need to adapt to a world in which a sizable chunk of applicants are comfortable with handling most or all of the transaction online.
“They’ve seen more technology shifts than any previous generation,” Bitter said of the up-and-coming cohort of older Americans. “While they are not digital natives, they are digital pioneers.”
That’s why strategic online marketing — a sleek website, social media presence, and targeted e-mail blasts — remain important for even smaller originators to consider in 2018.
If it ain’t broke, don’t fix it. Despite the coming wave of digital pioneers, tried-and-true strategies like print advertising and radio spots still work to some extent. For a modern twist, Bitter suggested radio sponsorships on digital or satellite channels that have a generally older listenership — for example, an all-‘70s music or Willie Nelson channel.
The overarching point, Furlong said, is focusing less on the dollars-and-cents aspect of the HECM and more on the value proposition: How could the product improve a borrower’s financial resilience and comfort in older age?
“I want you to think about the reverse mortgage industry as one of the biggest opportunities,” Furlong said. “You’re the smartest in knowing what your customers need your product and service.”
Written by Alex Spanko