Fairway Independent Mortgage Corp. and the National Association of Insurance and Financial Advisors (NAIFA) have entered into an educational partnership, which will position Fairway as a subject matter expert in NAIFA’s Limited & Extended Care Planning (LECP) Center, RMD has learned.

The agreement will see Fairway provide educational materials for NAIFA-sponsored events like webinars, blog posts and print pieces in the association’s Advisor Today magazine publication. Additionally, Fairway subject matter experts will also join NAIFA’s National Speaker’s Bureau, and the two organizations will collaborate through the LECP Center to further the education of financial planners and consumers on a host of mortgage-related topics, including the greater incorporation of home equity into retirement planning.

While the partnership broadly incorporates all of Fairway’s mortgage business, the ability for the potential benefits of reverse mortgages specifically to be better communicated through this partnership is very high, according to the Fairway’s reverse mortgage division head.

Avoiding financial ‘malpractice’

An ongoing problem of retirement planning in America is that the single largest asset that senior homeowners have access to is often not a part of the conversations that take place in and around retirement planning, and this partnership will aim to change that more fully. This is according to Harlan Accola, Fairway’s national reverse mortgage director in an interview with RMD.

“If people are sick and they go to the hospital to have two specialists work with them, the two doctors talk to each other,” Accola says. “And if they don’t, or don’t read each other’s notes and work together, it’s called malpractice. The financial planning and mortgage worlds — especially reverse mortgages — don’t work together.”

For NAIFA, the association recently made a change to its governing code of ethics to make overridingly clear that members must act in the best interest of the client. Echoing Accola’s point, NAIFA came to realize that the willful dismissal of home equity from the retirement conversation could be seen as an act that doesn’t accomplish an advisory obligation of doing everything possible to assist a client. This is according to Suzanne Carawan, VP of marketing and communications at NAIFA.

“In that regard, reverse mortgages really do fit into that portfolio as something that comes up for quite a few options for funding,” Carawan says. “But kind of like long-term care, [the product category] may be either misunderstood, or was not put in the right context considering some new changes that we need to educate people about. So, that’s where Fairway fits in nicely.”

The reach of NAIFA, which has an estimated 25,000 members, will allow for a greater flow of information between the home equity experts at Fairway and the advising experts at the association, Accola says. Bringing this path up to NAIFA members further emphasizes the medical analogy that Accola started, and which Carawan finished.

“You need a care team,” she says. “If this were for your [medical] health, you’d likely have a whole set of doctors and specialists in different areas coming together under the auspices of one care plan. Why should that be different for your financial health?”

How the partnership naturally includes reverse mortgages

While forward loan officers will have access to the same educational materials and content that the partnership will produce, the biggest potential for expanding the base of borrowers is on the reverse mortgage side, Accola says.

“You can do a forward mortgage pretty easily without getting into [issues of] long-term care insurance, life insurance of legacy, assets under management and everything else,” Accola says. “For the reverse mortgage, you really have to have [those elements] involved. That’s why we’re starting with that, because that begs the need for financial planning.”

For NAIFA, the long-term care funding potential of reverse mortgages presented an attractive educational prospect, but the idea of using what is likely a senior’s biggest asset also made sense in terms of ways an advisor can make sure that all possible options are explored for retirement financing on behalf of the client.

“A reverse mortgage is definitely an option a client can take to try to find long-term care,” Carawan explains. “But then, it becomes more about asking if this [product[ is something that people should be using as an appropriate instrument in retirement. That whole comprehensive idea about strategically using reverse mortgages in the right situation, raises Harlan’s approach, [in that] not enough financial advisors even know the basics of this.”

On top of that, the potential ability for a loan officer to more actively plan for a future reverse mortgage among clients who may not yet qualify will also help to plan out a more robust roadmap for the client to follow when the time comes, Accola explains.

“A lot of the forward people never have had a relationship with a financial advisor,” Accola says. “We believe they should, because it will allow them to help people in their 40s and 50s. Informing them that they don’t have to pay off the house because they can get a reverse mortgage at 62 could allow them to invest more money now.”

Financial literacy and reverse mortgages

To begin the educational partnership, first some education about the possibilities and uses of a reverse mortgage had to be communicated to NAIFA, Accola says. While Fairway has been attending and exhibiting at NAIFA conferences for some time, a more detail-oriented conversation about the potential reformation of retirement and how to help more people was the initial catalyst for what would become a partnership, Accola says.

“What I talked to them about is that this is about changing the way retirement is done in this country,” he says. “This is not just about selling some reverse mortgages and helping some of their people sell insurance, or other products they have. We need to take care of the long-term care problem, and that is one of the biggest problems that we’re facing.”

As advocates for financial literacy among both its own members and the broader public, the incorporation of reverse mortgages into the broader retirement conversations was attractive in progressing toward that goal due to the underutilization of the home in planning for retirement, Carawan adds.

“We talk a lot about financial security for all, and financial literacy for all,” she says. “If there is an option that can really help Americans have greater financial security, then we need to learn about it, provide the right education for it and embrace it.”

NAIFA also recognizes that there can be a lot of widely spread misinformation about the reverse mortgage product category. Instead of warding them off of embracing it as an educational topic, it instead reinforces the necessity for clarity and accessibility of good information, she says.

“Many people are either using old, outdated information on which to base current decision-making that hasn’t been updated, or they just flat out don’t know,” she says. “What we do know is that our job here is to give a platform to [offer] all the facts and information. [A client can then] take that and decide how to build the right ‘financial health team.’”

Since a number of NAIFA members are in the long-term care insurance or life insurance business with long-term care riders, the pairing only seemed more natural in terms of expanding the retirement conversation, Accola says.

“We at Fairway believe that we can change a lot of the compliance problems by working together,” Accola says. “Because if we’re talking to the advisors, and we’re putting a client into a better situation because of the products that we both sell as part of an overall financial plan, we firmly believe that that is going to help with the compliance issue, which will only allow us to go on to help more people in retirement.”