Few people active in the reverse mortgage industry today have done more to advocate for the products’ mainstream acceptance as a retirement planning tool than Shelley Giordano. While her day job consists of overseeing enterprise integration at Mutual of Omaha Mortgage’s dedicated reverse mortgage division, Giordano is also a co-founder of the Academy for Home Equity in Financial Planning, currently housed at the University of Illinois Urbana-Champaign.
The Academy – previously known as the Funding Longevity Task Force – has been a pivotal player in the creation of academically-corroborated research from respected authorities that illuminate the potential effects that the employment of home equity and reverse mortgages can have on a comprehensive retirement plan.
Giordano also has a passion for the industry, and its potential to serve a segment of seniors who have needs in retirement that may not be met by conventional retirement financing strategies. This is especially true of women, she says, who are disproportionately impacted by issues in retirement.
Because of her dedicated product advocacy work and her role in proliferating the discussion of home equity and reverse mortgages to a broader audience of financial professionals, RMD is honored to welcome Giordano into 2021’s class of Changemakers.
RMD: I spoke to another member of this year’s Changemakers class, and he said that not enough people in the industry are actually getting reverse mortgages when they qualify. I’m paraphrasing what he said, but he feels that separates people within the industry too much from the product that they are trying to sell. What do you think about that?
Shelley Giordano: I think that’s perfectly valid. You know something much better when you have to go through the whole process yourself. I know quite a few reverse mortgage folks who have reverse mortgages, and quite a few of them have used the HECM for Purchase. I don’t know what percentage it is, but I can tell you that I was with some folks in Omaha a couple of weeks ago who are on the forward side, who just spontaneously said to me, “the minute I turn 62, I’m getting one of these things!”
I think a good example of buying into it is when you actually run into a financial advisor, who is either guiding his parents or grandparents, usually parents into it, or are getting one themselves. And we run into that a lot. So, you make a presentation about reverse mortgages, and then, particularly if it’s with a Realtor group, they come over and they want to get a reverse mortgage themselves. So, there’s that epiphany when you get belly-to-belly to people and start talking about it, and they can start applying it to their own situation. It entrenches the whole thing in their minds.
I mean, I think it’s a great idea that people get reverse mortgages, obviously!
RMD: In terms of all of the changes that have been applied to the industry that come from both within and outside, do you think the reverse mortgage industry is changing fast enough today?
SG: I would say we’ve made strides, but there are probably folks who are still too focused on the “last resort” aspect, [that idea which says reverse mortgages should only be used when all other options are exhausted], which I am always uncomfortable talking about. That’s because I never want to appear like we don’t want to help people who are in that low-to-moderate income [threshold].
I notice that when we go to industry meetings that the regulators seem to have a tremendous amount of focus on that low-to-moderate scale of income. For us to be a big industry, we need to be able to appeal to the mainstream. And in order to do that, we’ve got to continue to knock down those ideas that continuously say that “reverse mortgages are only for people who are cash poor, and house rich.” We want people to be thinking about reverse mortgages as a way to protect their other assets.
Barry Sacks and Wade Pfau in particular have done such a spectacular job of demonstrating that. The idea that having that [HECM] line of credit in place and that it is going to continue to grow in value regardless of what the market does, or what the housing market does. It’s still there. So, I guess the answer is that we’re feeling some change. It’s gratifying to see other players in the industry being able to talk beyond merely keeping a borrower out of foreclosure or ahead of bankruptcy.
All of those things are great because we want to help people. But again, in order for us to be an industry that is not just a niche mortgage, we need to be able to be ready and able to be part of what people expect to do when they hit retirement. […]
It’s still just astounding to me that financial advisors are forbidden to have conversations about the housing asset. It’s just wrong. I used to be more reluctant to be so forward, but just because financial advisors don’t get paid on reverse mortgages doesn’t mean that it’s not something that they should discuss with their clients. To be forbidden from having a conversation is wrong. [The housing asset] makes up two-thirds of the average client’s net worth in America.
RMD: About a decade ago, when the major lending institutions started getting out of the reverse mortgage business, it seems that there were a lot of people in general that left, too. Did you ever consider getting out at that time? Or, were you pretty resolved to stick with it for the long haul?
SG: I’ve been in the business uninterrupted, except for six months when I took time off to make a big move. I’ve been in the reverse mortgage business my whole career. And from the very beginning, I’ve just believed in it. From the first time I heard of a reverse mortgage, probably in the 1970s where it was just described to me as someone putting money into their house, and then they hit retirement and the money starts coming back to them, to me that was just the most brilliant path. The whole concept of it, I’ve just always appreciated and understood that it could make a difference in people’s lives, and that it just seemed like a rational approach.
But even since then, over the years with the work that the folks at the Academy for Home Equity in Financial Planning have done, I’m even more rabidly enthusiastic, because now there’s math behind it. As Barry Sacks said to me one time: you’ve got all these assets, and you’ve got your house. And when you take out a reverse mortgage, you’re using up some of your equity. But he said, “just think about it: you still get to live in the whole house.”
It’s not like if you’re using up your home equity in a way that allows somebody to come in and cut off your spare bedroom, and then the next year cut off your third bathroom, and then the next year, the garage. You get the full use of the house! That’s kind of like the essential difference between using a reverse mortgage and spending down your housing equity, versus spending down something else. Because, once you spend another asset down, it’s gone for good.
I just think that people need to be thinking about it. Not that they have to have a reverse mortgage (even if I think most people would be well served to at least set up that line of credit) but to not think about it at all, because you’ve got a negative, you know, connotation from it because of a joke on The Kominsky Method, they don’t even know what they’re talking about. They have no idea.
There’s also another element to this I wanted to be sure to mention.
RMD: Please, by all means.
SG: Women are disproportionately affected in retirement. They make less money, they get less social security. They take time out from their careers to take care of children and other family members. They take care of their husbands when their husbands are sick. And then when they’re widows, there’s nobody there to take care of them in many cases, plus you have phenomena like the “pink tax,” and they’re shy investors.
They only want to invest in stuff that that is really safe and doesn’t offer the kind of returns that will keep them in good shape for a long retirement. So, I do wish that our industry would pay more attention to women. I’m not a marketer so I don’t know how to how to do that, but it seems to me that they’re the ones who need to understand how a reverse mortgage works, and how it can help them.
RMD: Do you have any perspectives on what you think the industry could be doing better to try and connect more broadly with women so that they realize that this is an option? Especially if they are coming off of a long period of time where they served as a primary caregiver, or one of the several other instances that disproportionately affects them in retirement?
SG: Just kind of by accident, I got focused on this. Another thing is divorce, it’s terrible for women. I talked to some financial advisors who were interested in women that were vulnerable in retirement, and it was just so enthusiastically received, and then I just started to notice that there are a growing number of financial advisors out there whose practices are focused on women.
So obviously, that would be a good place to start. But in terms of ads and targeted marketing, I don’t know. I don’t know that anybody has really tried to connect with women in places where women are spending their time social media-wise, like, Pinterest. There was an article in the Wall Street Journal recently about how effective Pinterest is, and predicting what is on the minds of women who have these bulletin boards. For instance if you put a tile of kitchen tile on your board, then Pinterest thinks you’re probably in the market for a new kitchen and will start sending you ads for appliances, that kind of thing.
My point is that I think that there are places where women are, and talking about issues that are going to affect women in particular just might be something that we as an industry could do a better job at.
RMD: Tell me more about your work with Mutual of Omaha, and how it has enabled the mission of the Academy.
SG: Mutual of Omaha, the reverse mortgage team has been together there since around 2005. They were Security One Lending at that time. I met that executive team in 2011, and specifically Torrey Larsen, who asked me to create the Task Force that eventually became the Academy. He asked us to do what we could to bring the true experts in retirement income together. And so, this whole team – I’ll just call it the Torrey Larsen team, for lack of a better name – I’ve been involved with for 10 years.
When they all moved to Mutual of Omaha, we recognized that it was a big job to integrate what the reverse team was doing with both Mutual of Omaha Mortgage, which is a really good mortgage company, as well as the 1,200 advisors they have. I had been working with them as a consultant, and all of us together decided that it would be better for me to be working from the inside to bring reverse mortgage knowledge and understanding to the parent company, the enterprise. That has been a lot of fun, it really has been wonderful. Mutual of Omaha’s just a fantastic company, it’s been around for 112 years and takes care of one out of 50 families who have had to pay life insurance benefits because of COVID.
It’s just a strong company, and the fact that the parent company is still the only financial services company out there that has embraced reverse mortgages wholeheartedly without a bunch of [extraneous conditions], our advisors are encouraged to know about reverse mortgages. And so, that is innovative. It’s a real change, and I’m very excited to be part of it.