I’m sure many of you have come across the following scenario:
I meet someone new and the conversation eventually circles around to what I do for a living. About nine times out of 10, when I state I’m in the reverse mortgage business, my acquaintance responds silently with a look on his face that says, “Does this person really take seniors’ homes away from them for a living?” Fast forward 10 minutes later, after I’ve given my reverse mortgage elevator speech, plowed through their misperceptions and described how this financial tool can help millions of seniors, and he is inevitably asking for my business card to share with someone they know.
One conversation at a time, philosophically speaking, is how we increase our market penetration rate. We cannot rely on mass advertising/marketing or just pay higher commissions than our competitors to draw in sales reps. If we as an industry continue with just these two business models, I’m certain the reverse mortgage market will never reach its full potential.
Please don’t get me wrong—mass marketing helps. But that on its own is not enough to grow industry volumes to where they should be. It’s difficult to change consumer perceptions about the product with a single 60- or 120-second TV spot. Yes, some seniors call a lender in order to get a better understanding of the product, but the majority of American seniors are not persuaded by just a commercial, and TV has limited scale potential. Likewise, Google AdWords and Bing do not create instant interest in the product. These vehicles simply direct people who are already interested in the product to a company willing to pay for them. Moreover, while a direct mail piece may help continue the conversation, the cost per qualified lead is higher than any other lead generation
method, making it cost-prohibitive to scale.
As for those who pay to play with their commission structure—while this might be financially advantageous for the “feet on the street” sales reps out there (and we shouldn’t fault them for wanting to improve their financial livelihoods), this model lends itself to the high employee attrition rates we see in our space. Not only is it difficult for companies to remain both profitable and competitive to work in this model, it contributes to shrinking the pool of experienced sales reps each year. This translates to fewer conversations decreasing loan origination volumes.
The Solution Is Clear
If we want to reach our full potential as an industry, businesses need to consider these changes:
ONE Hire, invest in and develop sales reps.
To generate more conversations about reverse mortgages with senior consumers and their families, we need to grow the number of trained sales reps in our market. By building a larger and more informed sales force across the industry, we can all reap the benefits of growth. And if we invest in our work force to develop and coach them, not only will they be more effective in their positions, but we’re fostering their professional growth for long-term retention.
History has shown it’s OK to look outside the industry for qualified candidates. Financial Freedom, Wells Fargo and Bank of America did not rely on other companies to feed their sales force. They trained employees who were unfamiliar with reverse mortgage loans, and they were able to scale their businesses to levels we have not seen since they left the market.
TWO Share information with influencers/expand your horizons.
We should nurture professionals who deal directly with American seniors on a daily basis, including real estate agents, traditional forward brokers, builders, financial advisors, caregivers, and estate or eldercare lawyers. The more informed they are about the product, how it can help clients achieve security in retirement, and how it can grow their own business, the better it is for all of us.
THREE Embrace recent policy changes.
While it’s easy to blame decreasing industry volumes on the product policy changes that have been instituted over the past 18 to 24 months, I think many of you will agree, we don’t have a product issue. Policy changes have buttoned up most of the remaining market challenges to ensure consumer safety and to reduce foreclosure risk for the long-term sustainability of the industry. Even in a post-utilization and post-FA world, we have a tremendous product that can serve a huge demographic of American seniors. We know this because every time we educate potential borrowers, they are ecstatic about how the product can change their lives.
FOUR Combat negative press with positive stories.
All of us who reside in the reverse mortgage space have encountered the borrower who cries upon receiving the news that his or her loan has been funded. For these folks, their reverse mortgage was a game changer. Most of us have access to borrower stories about how their reverse mortgage paid off their homes, paid for in-home care to help them or their spouse live out his days in comfort, or helped them move closer to family members or warmer climates. As an industry, we need to be more proactive in sharing these stories to consumers and their families. We need to get the word out, over and over.
The reality is that there’s no magic pill to growing the market overnight—it will take one conversation at a time and a regular, sustained effort to educate and inform our sales force, influencers and customers. And if we do, there may be more opportunities than we know what to do with. Wouldn’t that be an amazing challenge? I imagine walking into a room and meeting new acquaintances, and when the conversation turns to what I do for a living, I’ll see them smile and hear them proudly share their friend’s, loved one’s or their own reverse mortgage story.