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Financial Planners Coming Around to Reverse Mortgages Through Re-Education

Take it from Dr. John Salter, who has spent many months studying reverse mortgages in depth to determine their effectiveness as a retirement planning tool: the products will be part of the long term conversation. How long it will take remains a question, but through the research of Salter in his work at Texas Tech University and now his work on an educational campaign to help planners learn the ins and outs of reverse mortgages, the landscape is going to get brighter.

In going in to seminars with the financial planning community, Salter says, one of the biggest hurdles is re-education.

“The first third of the talk is always: ‘They’re expensive.’ And that was our thought too, prior to being educated,” Salter says. His research, conducted along with financial planning guru Harold Evensky, shows the use of the Home Equity Conversion Mortgage Saver as a retirement planning game-changer. The very low upfront fees and credit line growth feature are two points on which Salter says he does much of the educating.

But by the end of a seminar, reverse mortgages are the hot topic.

“Most of the questions at the end of the talk are about reverse mortgages,” he says. “People say they learned a lot. For us, it’s about getting the education across and then up to the planner to listen and make their own judgement as to whether they use it or not.”

Contrary to some belief that communicating with financial planners should involve a conversation about how reverse mortgages add value to financial planners, Salter says it absolutely should not come up in the conversation.

“That’s just another potential way to give the industry a black eye. It will come across as ‘this is a way for you to make more money as a financial planner,'” he says. “Everyone should be required to do what’s in the client’s best interest. It’s no different from the talk about paying an originator [on the loan amount]. You should just get paid for selling.”

Among both financial planners and his own clients, Salter says the reception has been very positive once the misinformation stands corrected and the benefits are seen to outweigh the costs. Above all, however, the financial planners still stand as one of several reverse mortgage “gatekeepers,” like adult children or other potential influencers of those in the decision-making chair. 

“The thing about educating planners is, people trust their planner,” Salter says “If we say this is something we should look at, they’ll probably listen.” In addition, looking at the product as a one-size-fits-most solution is also probably not going to provide much of an outcome. 

“When it comes to your financial situation, the averages don’t work. There are rules of thumb, and they apply to people with 2.3 kids and 3.1 cars—not an individual person. It’s taking those principles, though, and applying them.”

Written by Elizabeth Ecker