Financial Planners Warm to Reverse Mortgages, Though There’s Still Work to Do

Although there are still issues in the general reputation of reverse mortgage product offerings, more financial advisors and planners have shown signs of warming up to the product and how it could help their clients to fund retirement. This is according to a story found in Financial Advisor (FA).

Still, even with progress having been made concerning the ways a reverse mortgage might be able to help clients make ends meet in retirement, some in the financial advisory services business still know that a bad reputation can often be a difficult thing to shake off.

“Gone are the days of the big, bad reverse mortgage, but like anything, once the bad taste exists sometimes it’s hard to move past your first understanding,” shared Carlsbad, Calif.-based Comprehensive Advisor founder Brett Gottlieb with FA. “We teach the client about [reverse mortgages] even if they don’t have a need, so they understand the possibility if it is ever needed in the future.”

While Gottlieb also expressed a belief in the ability of a reverse mortgage product to help a retiree to fund their retirement if they’re primarily depending on limited resources like Social Security or personal savings, many advisors still express their belief that the product should only be used as a last resort for their older clients.

Joseph Conroy, a Certified Financial Planner at Synergy Financial Group in Towson, Md. says that reverse mortgages tend to rank toward the “bottom” of the hierarchy for client funding sources, coming in “just above” taking a premature IRA or 401K distribution and paying the taxes and penalties.

“[A reverse mortgage] is expensive, it takes away from future options and flexibility and should really only be considered as a last resort type of option,” he offered to FA as the reasoning behind his belief.

While the idea of reverse mortgages as a last resort still continues to be shared by many in the financial advisory business, Lauren Klein of Klein Financial Advisors in Newport Beach, Calif. expressed to FA that writing them off entirely would be generally inadvisable considering the benefits that can be strategically employed to manage a client’s cash and keep their resources liquid in retirement. She even bucks the “last resort” belief outright.

“A reverse mortgage should never be used as a last resort when all other assets have been depleted,” Klein said. “Having this flexible resource available if and when it’s needed can help turn a client’s home equity into a powerful and strategic financial planning tool for decades to come.”

Find the full story at Financial Advisor.

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