For a reverse mortgage professional, a relationship with a financial planner professional can be a very powerful referral partnership to forge. Financial planners provide their clients with necessary advice on what they should do with their money, are very receptive to concepts that help their clients mitigate financial loss, and offer strategies to allow someone to ensure the longevity of their monetary resources among many other important services.
Since a key argument reverse mortgage professionals make about the product they work with revolves around shoring up finances for a secure retirement, financial planners may be particularly receptive to reverse mortgages as tools to help fund their clients’ retirements. Approaching a financial planner can be nuanced, however, since people in that profession are also highly aware of many of the same reputational hurdles reverse mortgages also face with consumers.
At RMD’s Sales & Marketing Forum, a digital event held at the end of March, Finance of America Reverse (FAR) VP of Retirement Strategies Stephen Resch spoke about what he feels would be the best way for reverse mortgage originators to approach financial planners, and the kinds of lessons that planners may find most intriguing about the product category.
Using the right context with financial planners
Like many financial planner professionals, Resch himself was not immediately sold on the concept of reverse mortgage products until about 15 years ago, when a very zealous reverse mortgage loan officer kept trying to have a conversation with him about the product category. Still having misgivings about reverse mortgages, Resch describes his lack of receptivity to hearing what the originator had to say.
“I kept throwing him out,” Resch explains. “I was actually offended. I told him that ‘my clients don’t need reverse mortgages, and I don’t need you.’ But finally, after about 6 months, he was very persistent and he finally said something to me that made me stop and think.”
Instead of wanting to talk specifically about reverse mortgages, the originator instead asked if Resch could better enhance or manage a client’s financial future if an extra $300,000-$400,000 was available to him. When putting it in those terms, that’s what caught Resch’s attention, he explains.
“That just really brought me into what he was talking about,” Resch says. “Because as an advisor, if you’re looking at a 20 or 30-year retirement plan, you always worry about [whether or not] there are gaps someplace. Whether there’s a shortfall on long-term care, or if you don’t have enough reserves to manage sequence of returns [risk], there’s always something that you could better handle if you had access to more capital. So, that’s what brought me in.”
The changing perspectives
The greater presence of financial planners’ interactions with the reverse mortgage industry is visibly apparent through things like the academics who serve as part of the Academy for Home Equity in Financial Planning at the University of Illinois Urbana-Champaign, and some key, high-profile partnerships that have been forged between financial planning organizations and reverse mortgage lenders. These elements, as well as personal interactions that Resch has had, indicate that a corner may have been turned regarding these professionals’ perspectives on reverse mortgages.
“Their attitudes have definitely changed, but it’s really mainly been in the past few years,” Resch says. “I think there are several factors as to why, but number one is that the industry is taking so many steps to safeguard this program and make it a safe product for everyone. Whether you’re a financial adviser referring it or you’re a client using it, those safeguards have really helped to eliminate the bad press that we’ve had for so many years.”
That’s not to say that bad press is a thing of the past, but the strides made by the industry, its representatives and U.S. housing authorities in the federal government have done a lot to reform the image of a reverse mortgage as something that could be a potentially useful tool for a senior in the appropriate situation, he says. Additional attention from academic researchers have also helped to recharacterize what reverse mortgages are, and can be for people, he says.
“There has been so much research done by some tremendous people who have just really helped to enlighten the advising community, and the planning-based consumer as to concepts that could be used with home equity,” he says. “I think the other thing, too, is that we [in the industry] are all out there speaking and doing our part to get that message across. There’s more to this program than just something to bail out someone who doesn’t have any money.”
Planners and consumers both need reverse mortgage education
Not only is there more to the product category than that, but Resch says that a “loan of last resort” scenario for someone who is needs-based could be the least productive potential use case for a reverse mortgage. Still, even taking stock of improvements that have been made in terms of reputation management and press coverage, education must remain a top priority for the industry, Resch says.
“[Financial planners] are becoming engaged and interested in reverse mortgages, but they still have not really bought into the concept,” he says. “On the advising side, for example, there’s a product called an ‘index annuity.’ A lot of advisers use this with their clients. I think the concept sounds good, but I’ve never really had an insurance person come in and sit with me and explain the product and show me how this could help one of my particular clients. So I’ve never referred this product to anybody, I just walk away from it.”
The point is that taking the time to sit down with a planner and explain from a specialist’s standpoint why a financial product could be of benefit to clients can be a very important, difference-making exercise, Resch says.
“If I don’t know it, I’m not going to refer it,” he says. “I think advisors have the same way of thinking when it comes to reverse mortgages. If they’ve heard enough and makes sense to them, they think they could use it. But until they know this product, they’re not going to refer it. So we really need to continue doing the webinars [and the educational outreach], but we also need to get in that office, sit with them and make it personal for them in order to show how this could work for their clients.”
Effective methods to connect with financial planners
Obviously the idea of getting into someone else’s office has had to evolve necessarily due to the COVID-19 coronavirus pandemic, so if necessary then it becomes more important to lean on modern technological tools like Skype, FaceTime or Zoom, Resch says. An originator using a mass email to financial advisors may actually be working against themselves to some degree.
“I think a lot of the mistakes that I’m seeing from people trying to get in front of advisors is they’re doing these mass email campaigns,” he says. “That may work, but usually I don’t think it’s going to work. There’s got to be a few things that are going to attract the advisor. [An email] has to be very short and to the point, and it has to look personal. The only emails I read have a very short subject line that I can quickly absorb, and I have to be able to see in that box without opening the email exactly what they’re talking about. And if they don’t grab my interest in that moment, their message is going to be deleted.”
In terms of the best potential way to get in front of an advisor, sometimes the oldest tools can be the best ones, he says.
“Better yet, I think the old phone call is the best route to go,” he says. “In my advising office, I get probably two voice messages a week [compared to sometimes hundreds of emails]. That’s it. And both of those I will listen to because if someone is leaving me a message, my curiosity is up.”