A big component of the modern reverse mortgage business is in education about the modern iteration of either the Home Equity Conversion Mortgage (HECM) or its proprietary alternatives, and in the recruitment of new people to join the industry on the origination or broker sides. It may be challenging to know exactly where to start for those who may see the potential benefits of adding a reverse mortgage offering to their product catalog.
It’s also important to know the current situations facing seniors and how a reverse mortgage may be well-suited to assist an older individual looking for additional cash flow in their later years. This is according to Jim McMinn, sales training manager at Longbridge Financial at the National Reverse Mortgage Lenders Association (NRMLA) Virtual Annual Meeting earlier this month.
McMinn, who has been in the reverse mortgage industry since 2002, explained the current retirement landscape in the United States, and how that contributes to a situation where a senior may find a reverse mortgage beneficial. Sourcing a viable reverse mortgage lead can be made or broken by understanding all American seniors’ circumstances.
The current retirement landscape: favorable to the industry
A large component of confidence that many people in the reverse mortgage business have about the industry’s prospects going forward centers on favorable demographics. According to the nonpartisan research organization the Population Reference Bureau (PRB), the share of older Americans that make up the nation’s total population is on track to expand significantly, coupled with other trends, including increasing lifespans and longer careers for older Americans, McMinn explains.
“The number of Americans 65 and older is projected to nearly double from 52 million in 2018 to 95 million in 2016,” McMinn said based on PRB data. “We know that there are about 11,000 Baby Boomers turning 62 every day, which really increases our overall market. Older adults are working longer, but in 2018, 24% of men and about 16% of women aged 65 and older were in the labor force. These levels are projected to rise further in 2026 to about 26% for men and 18% for women.”
In 1950, the average life expectancy of an American was 68 years of age, and that is increased to 79.8 years of age today, McMinn says. Part of this is attributed to a reduction in mortality due to the improved quality of medical care that has emerged over the past seven decades. Still, it also creates issues for many longstanding notions related to retirement funding, he says.
Do not underestimate the power of your words
Being embedded in the industry often comes with a great deal of direct knowledge about the potential benefits a reverse mortgage can provide to a qualifying borrower, but as most industry participants know, reputational issues die hard. Still, professionals shouldn’t underestimate the impact of their words when talking about the potential benefits that could exist for the right customer, McMinn says.
“One of the big things is talk, talk talk,” he says. “Word of mouth is key. I did a lot of traveling in my career and took many airplane rides to get to different locations. Inevitably, somebody would ask me what I did for a living and I would tell them [I work with] reverse mortgages. People would say to me, ‘That is a terrible deal!’ When I tried to break it down with them and ask why [they thought that way], it’s usually because they had a friend of a neighbor whose sister took a reverse mortgage and lost the home.”
However, drilling down into the details of those scenarios would often reveal that a reverse mortgage likely wasn’t the culprit, McMinn says.
“It either wasn’t a reverse mortgage, or they had the material or the information all wrong,” he says. “And so, by talking to people, interacting, letting them know and dispelling all those myths is really going to go a long way in our industry.”
Seeking trusted advisors, community visibility
Particularly for people who are either new to the business or trying to find a way into it, the importance of finding trusted advisors to people within the reverse mortgage demographic may not be immediately apparent, McMinn says. Because reputation-related hurdles have challenged the reverse mortgage industry, borrowers often seek out voices of trust within their spheres of influence or in the local business community for assurance that reverse mortgages are safe.
“Whether you’re talking to financial planners, CPAs, builders, real estate agents or elder law attorneys, these are people that you should form a relationship with,” he says. “Be present in local events so people understand that you are the individual that is out there doing reverse mortgages.”
That visibility also lends itself to the idea of becoming involved in community organizations, which accomplishes the missions of both adding necessary credibility to a reverse mortgage business as well as connecting with potential referral partners who may be trying to find ways to offer services that can help seniors, McMinn explains.
“This is a great way of getting involved,” he says. “There are people that are like-minded out there, looking to do the same thing that you’re looking to do. Finding a partner is important too, and what I like about that is finding other individuals with a similar mindset. These are people that are looking for business opportunities, looking to help older adults. You can partner up, join efforts and then provide resources to older adults.”
Such partnerships can extend beyond reverse mortgages, too, he says. Information that will be helpful for older adults can be hard to find, so being involved with people or organizations that often try to find holistic solutions focused on the senior demographic can be an excellent spot to sit in, McMinn says. This feeds into a potentially fruitful marketing approach that encourages comprehensive action.
“I say use a systematic approach to your marketing,” McMinn explains. “Make sure that you’re working every angle, establish a reverse mortgage presence, and become recognizable as the expert in the reverse mortgage industry in your community.”