Reverse mortgages are not the loan they used to be. Once used largely as a loan of last report by seniors unable to make ends meet, they have undergone substantial policy changes over the years that have repositioned them as a worthy financial planning tool.

As a result, they have been embraced by numerous financial experts. Research published in The Journal of Financial Planning and articles in mainstream media outlets by well-respected authorities in retirement planning have detailed the ways this loan can be used strategically to bolster one’s retirement income plan.

But despite all this, many financial advisors are unable to discuss them.

The problem is an institutional blackout placed on advisors from their broker-dealer firms. And apparently, this problem is widespread.

Shelley Giordano is the chair of the Funding Longevity Task Force, which aims to spread awareness about reverse mortgages among the financial planning community.

She said she hears weekly from loan officers and financial advisors at firms around the country that their discussions about reverse mortgages have been shut down by their compliance. Some are even threatened with disciplinary action should they proceed.

“It is the job of compliance departments to be risk averse, and they are concerned about headline risk should one of their associated persons use a client’s home equity inappropriately,” Giordano explained. “There is no incentive to take on this risk since there is no direct revenue for recommending a reverse mortgage.”

Confusion about reverse mortgages might also play into the problem.

“To the extent that compliance folks have considered reverse mortgages at all, they are subject to the same old misconceptions as everybody else,” she said.

Giordano said that part of the problem is that financial planning has not traditionally included the utilization of housing wealth.

“At the core designations, licenses and registrations do not include housing wealth in their curriculum or testing so financial planners come into a practice without any information on reverse mortgages,” she said.

The American College of Financial Services is seeking to change this, establishing an RICP designation several years ago that explores reverse mortgage use. More than 11,000 students are now enrolled in the course.

With The American College and the Task Force joining forces to take up the cause, there’s a chance that we could see a change in the tide.

Curtis Cloke, the founder and CEO of THRIVE and a well-known speaker in the retirement income world, said he is seeing the beginnings of a shift in acceptance among broker-dealers.

“We’re seeing some movement underfoot of just a handful of broker-dealers who have heard the messages in a multitude of ways,” Cloke said. “Some are finally saying this is a fiduciary discussion that we have to have… it’s all happened just this year.”

Cloke said he is working with one of the largest broker-dealers right now on establishing guidelines that would allow their advisors to discuss reverses with their clients. As of press time, HousingWire was unable to receive confirmation from this firm that it was re-evaluating its stance.

Cloke said the broker-dealer came to understand that it was not about compensation, but about the need to offer comprehensive advice.

“They finally understood that were not talking about brokers selling or being compensated for the sale of reverse mortgages. Rather, this is about understanding how it works as a financial plan, being able to frame how a reverse mortgage may affect a client and then referring them to the appropriate locations for discovery and fact finding beyond their advice that does not involve them.”

“One of the things that fiduciaries have to be able to provide is evidence of the value of their advice for charging the fees they charge, and this just adds another element and dimension of their ability to say, ‘Hey, we’re not leaving stones unturned,’” Cloke said.

“For the years this topic has been silenced. For many of Americans, 50% or more of their wealth is in their house, and the advice being given to clients in retirement completely ignored this.”