Communication is a building block of any good relationship, be it business or personal. And in the reverse mortgage industry, the professional exchange between originators who educate financial advisors on HECMs has become one of the most effectual aspects of this burgeoning industry.

Due to the regulatory changes made to the HECM program over the last five years, a fresh dialogue is greatly needed to both approach and build successful relationships with financial advisors who may be clinging to the archaic notion that a reverse mortgage is an expensive option only to be considered as a last resort. Financial advisors who are uninformed about the lower-cost options now available and the unique features of HECMs may be giving their clients out-of-date advice.

According to Mark O’Neil, national sales leader at Reverse Mortgage Funding, “In my experience, speaking to financial advisors can be intimidating. But what HECM professionals need to keep in mind is that you don’t need to be an expert in financial planning in order to have a meaningful conversation with these advisors. Rather, you need to educate them on the importance of the FHA insurance and the features and protections it supports. Also, you need to share tangible examples of how HECM payment plans can be designed to solve various client challenges.”

It’s no secret that home equity is quickly becoming a more regularly acknowledged component of the fiduciary standard, which requires advisors to put their clients’ interests above their own. But in order to take advantage of the changing tide, it behooves us to focus not only on promoting the benefits of reverse mortgages for an advisor’s clients, but for the advisor’s own business strategy as well.

When discussing HECM products with advisors, consider highlighting the fact that making their clients aware of additional products and tools (i.e., a reverse mortgage) will add value to their services and increase their favorability in the eyes of their clients, which could lead to more clients. Moreover, incorporating reverse mortgages into their retirement strategy arsenal will mean more of their clients’ invested assets can remain under their management, and for an extended time period. Thirdly, and perhaps most importantly, remind the financial advisor that every client sleeps more soundly knowing that their wealth and assets are in the hands of a knowledgeable and progressive consultant, one who considers all available approaches when ensuring their secure retirement.

“The message a lender or loan officer should want to get across is that home equity is an important piece of the retirement financing puzzle, and the reverse mortgage is a complement that can help strengthen an overall plan,” says O’Neil. “As the growing body of research by experts like Dr. Wade Pfau and Dr. John Salter shows, the thoughtful use of a reverse mortgage can reduce the chances that a retiree outlives their assets. That is the No. 1 fear of people entering their retirement years, and it is always something that good planners are trying to help their clients avoid.”

A loan officer who provides in-depth knowledge and concrete examples of a HECM line of credit in action has the opportunity to sway an advisor’s otherwise ambivalent outlook toward reverse mortgages.

The conversation with financial advisors should, in my opinion, start and end with the HECM growing-line-of-credit option, and how it is a vastly superior product to a traditional HELOC for clients age 62 and older. A reverse mortgage line of credit offers substantial advantages over a HELOC, including a flexible repayment option, a credit growth feature, various payout options, non-recourse terms and security. There are about 5 million senior households in this country with a HELOC. I challenge anyone to show me how the majority of those homeowners would not be better served by a HECM line of credit instead.

Showing a financial advisor a simple graph illustrating a real line-of-credit growth scenario is a powerful way to demonstrate one of the most obvious advantages of a reverse mortgage line of credit over a HELOC. And it will undoubtedly allow for a segue into a conversation about additional reverse mortgage solutions for their clients. This kind of educational collateral, along with copies of the aforementioned academic research, can paint a clear picture of the practical uses of a reverse mortgage, and should be in every originator’s briefcase when they head out for a meeting with a financial advisor.

Ultimately, reverse mortgage professionals must work in tandem with financial advisors to truly impact how consumers perceive the importance of home equity in retirement planning. The goal is to make reverse mortgages a mainstream retirement financing solution. Those who proactively interact with and educate advisors will lead more financial professionals to embrace reverse mortgages as a means of closing the retirement income gap for their clients. n

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