FAR, Morningstar to collaborate on reverse mortgage education for financial planners

The collaboration is designed to increase the avenues of reverse mortgage product education to a segment seen as a critical referral partnership cohort

Finance of America Reverse (FAR) announced this week that it has entered into an educational collaboration with investment research provider Morningstar, Inc. to become the first reverse mortgage-specific education provider that Morningstar has worked with.

The paid collaboration on the Morningstar Advisor Workstation makes FAR’s industry educational tools available to an estimated 150,000 financial advisors across the United States, according to an announcement by FAR.

What the collaboration aims to accomplish

“The aim is to equip financial advisors with timely information and tools needed to navigate the breadth of home equity options available to their clients ages 55 and older,” the announcement said. “Additionally, the collaboration demonstrates to advisors how this often-overlooked asset can help their clients plan for retirement.”

FAR’s educational tools are specifically designed to illustrate how the incorporation of a reverse mortgage — either through a Federal Housing Administration (FHA)-sponsored Home Equity Conversion Mortgage (HECM) loan or one of the lender’s proprietary reverse mortgage options — can influence and potentially stabilize a senior’s retirement portfolio, according to the announcement.

“With FAR, financial advisors will learn about the unique benefits of a reverse mortgage and FAR’s other home equity products,” the announcement said. “This will help them better understand how to practically utilize the products in their client’s plans, especially in the case of mass affluent clients [who typically have assets under management less than $2.5 million].”

According to a Morningstar representative, the company sees the potential for reverse mortgages rising due to a need that certain advisors have expressed for additional tools to employ.

“We’re excited to welcome FAR as a reverse mortgage lending educator in Morningstar Advisor Workstation as we expand the breadth of solutions offered within our platform,” said Kevin Reed, Head of Strategic Platform Partnerships with Morningstar in the collaboration announcement. “We continue to see a shift toward clients looking for financial advisors to provide advice across the balance sheet.”

As the home is often the most valuable asset for a household, some advisors may find it beneficial to incorporate its equity into a broader strategy, Reed said.

“For many retirees, their home is their most valuable asset, and it deserves to be considered as part of a holistic financial plan,” he explained. “We believe that offering access to information about FAR’s range of home equity products within Morningstar Advisor Workstation will enable financial advisors to gain knowledge on reverse mortgages and offer more comprehensive advice to clients.”

How such a collaboration could benefit the industry

To get a better understanding of how something like this could impact the wider reverse mortgage industry, RMD reached out to FAR President Kristen Sieffert for perspective specifically geared toward the industry audience and its stakeholders.

Kristen Sieffert, president of leading reverse mortgage lender Finance of America Reverse (FAR).
Kristen Sieffert

“This is a major step not just for FAR but for the industry,” she told RMD. “Education has long been a cornerstone of our mission at FAR, demonstrated by our work with the Financial Planning Association and the Stanford Center on Longevity. Adding Morningstar to the list of cultivated relationships is a wonderful expansion of the reach of FAR’s Retirement Strategies Division.”

Sieffert added that expanding the reverse mortgage industry’s educational outreach is particularly necessary due to the current financial climate, which continues to reckon with issues such as historic levels of inflation and the ongoing COVID-19 pandemic.

“As financial advisors guide clients through today’s turbulent economic environment, educating advisors about home equity and how it can be used to support a long-term retirement plan is more important than ever,” she said. “By providing the more than 150,000 users of the Morningstar Advisor Workstation with access to our innovative educational offerings and resources, we believe we can open the door for more homeowners to use their home equity to thrive in their retirement years.”

The continuing opportunity represented by financial planners

Although reverse mortgage volume recorded a notable drop in September, the interest in the product earlier this year appeared to be higher among financial planners according to endorsement data earlier this year as well as perspectives from academic authority financial planners cited in a story at CNBC in May.

“Reverse mortgages have developed a strong following in the financial planning profession, with advisors like [Wade] Pfau recommending them as a potentially useful option in retirement distribution management,” the column reads. “Home equity represents about 66% of the average retired American’s wealth, so using it as a potential source of funds if you’re strapped for cash makes sense — even if costs are higher now,” the CNBC story said based on Pfau’s input.

According to data released by FAR this past summer, financial planners continue to represent a large opportunity for the reverse mortgage business to continue to forge bonds with, and that was indicated as an effort of FAR’s educational efforts by Kellan Brown, VP of retirement strategies at FAR.

“This group of professionals meets with both their clients and peers on a regular basis and has strong relationships with the audiences most apt to help older homeowners incorporate home equity into their financial plans,” Brown explained for RMD in July. “By meeting with and establishing connections with these key audiences, as well as sharing data and insights like those from our Home Equity Punch List and other reports that we publish, FAR will continue to advance the industry and encourage more homeowners to consider how they can put their built-up equity to work for them.”

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