Big bank departures add importance to financial planners’ recommendations for reverse mortgages



The exit of large banking institutions like Wells Fargo and Bank of America from the reverse mortgage market over the past decade has made the importance of forging benchmark partnerships with financial planners all the more important to the proliferation of new reverse mortgage business, since proximity to a variety of clients can be the key to arranging reverse mortgages for new clients.

As reverse mortgage agents aim to expand their repertoire of advertising methodologies, using an infomercial can be powerful, but also comes with some caveats that any reverse mortgage agent should be aware of. mind before engaging in such advertising campaigns. That’s according to a panel of experts in the reverse mortgage product category presented at the National Reverse Mortgage Lenders Association (NRMLA) virtual summer meeting this month.

While the exit of major US banking institutions has reduced the visibility of the reverse mortgage product in several demonstrable ways, financial planners represent a key business segment that can help make up some of the ground lost by the exit of these institutions. of the company. At the same time, reverse mortgage professionals would be well placed to exercise a certain degree of discretion in the types of advertising and information campaigns in which they participate in order to avoid giving advice for which an originator is not. qualified.

Why Financial Planners Are An Important Referral Source For Reverse Mortgages

Some reverse mortgage professionals continue to question the suitability and ability of a financial planner to help match an originator with a potential home equity conversion mortgage (HECM) borrower, but the importance of this industry to connect with such professionals is important because of the significant exits that the reverse mortgage industry has seen over the past decade.

So says Shelley Giordano, head of business integration at Mutual of Omaha Mortgage and co-founder of the Academy for Home Equity in Financial Planning at the University of Illinois Urbana-Champaign.

“So why are we interested in financial advisers in the first place? A number of things. First, they actually have clients, ”says Giordano. “Our industry has never, ever recovered from not being able to sit side by side in bank branches and share customers. So financial advisers are in contact with people. We are still extremely isolated, especially last year, to reach the end user of a reverse mortgage.

In the past, the proximity between a reverse mortgage originator and a financial planner at a large banking institution provided the planner with easy access to a better understanding of any misconceptions or factual inaccuracies he had about a business. reverse mortgage product. This is simply not the case, says Giordano.

“Over the years, if a financial advisor didn’t understand the research on a reverse mortgage, they would often dissuade the client from taking out a reverse mortgage after we had engaged with the client, and with the most outlandish objections – just flimsy objections – without discussing the value that other asset might have in retirement, ”says Giordano.

This is why this group retains an important potential place in enabling the industry to meet its goal of expanding the borrower base it serves, she said.

“Financial advisers are important to us, and for a number of reasons,” says Giordano. “We just have to persevere. Long ago, at an NRMLA meeting in New Orleans, we brought in Michael Kitces, a highly regarded financial expert. He begged the audience: “a company can’t do this, we must all come together and pull in the same direction.” And I am so thrilled. I see businesses every day developing their reverse mortgage agents to understand what the challenges of retirement are and how real estate wealth can fit in and really help. That’s great, but we still have a lot of work to do.

Avoid “crossing currents” between origination and financial advice

When engaging with a potential client on a financial topic, such as whether or not a reverse mortgage should be taken out, that same client can naturally move on to another financial topic and ask the originator what they think. without understanding the differences between discussing a loan product and offering financial advice. Authors will be in a good position to observe the “wall” that exists between such subjects at all times, according to James Milano, a partner at the Weiner Brodsky Kider (WBK) law firm that serves as an external advisor to the NRMLA.

“What we see a lot in the reverse mortgage agent space is something I call ‘infomercials’,” says Milano. “These are articles written by people, published in financial planning magazines. They talk about retirement and consider [the employment of] home equity, and I would say to you as reverse mortgage professionals: don’t cross the line the other way around.

In an earlier part of a presentation at the event, Milano discussed the complex legalities of a reverse mortgage business employing financial planning professionals. The initiators must avoid entering the territory in the opposite direction, explains Milano.

“If you’re a reverse mortgage loan officer, don’t market yourself as a financial planner,” he says. “These articles are great. I have read them. They are very informative. Use disclosures to tell people that you are a reverse mortgage loan officer, not a financial planner, that you are sharing ideas and that you [originate loans] for a living, but you are not a financial planner, you do not give financial advice.

Giordano closed the presentation by putting a finer point on the issue.

“Don’t give financial advice,” she told the reverse mortgage agent audience. “You are not a financial advisor. There are all kinds of rules against people giving financial and investment advice. Don’t get caught up in this.

This also applies to an initiator offering tax advice, which opens up a whole new network of laws and regulations governing the information people are supposed to receive from accountants and other tax professionals.

“We just had a case where there was a financial advisor who set up a Roth conversion for a retiring doctor, but it was a financial advisor, and they were using the HECM to pay tax, but that was the idea of ​​the financial adviser, explains Giordano. “[It was] not advice we give to the client. And again, never combine any other product with a reverse mortgage arrangement. I think if you just follow these general rules, you will stay out of trouble. But, we don’t want to scare you: go out and talk to these folks and see what they think and think about real estate assets and retirement.



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