Sept/Oct 2021 Reverse Mortgage Magazine

“It is murky beyond murky,” says Giordano, who also is a founder of the Academy for Home Equity in Financial Planning at the University of Illinois at Urbana-Champaign. But Giordano and Milano suggest that loan officers would benefit by having a basic understanding of the complexities financial planners face because reverse mortgage clients often get their advice from those pro- fessionals. Financial advisers also have the clients that can truly ben- efit from a reverse mortgage, so planners at least need to be educated on how it and other equity release products work. During NRMLA’s Virtual Summer Meeting held in July, Giordano and Milano dis- cussed the basics and why financial planners might be reluctant to relay information to their clients and why they sometimes might become impediments. “If financial advisers didn’t understand the research out there about a reverse mortgage, they oftentimes would talk the client out of doing a reverse mortgage after we had engaged with the client—and with the goofiest and flimsiest objections,” Giordano says. Concerns usually can be overcome with sound discussions about including equity release programs in an overall retirement strategy. “Financial advisers are important to us for a variety of reasons, and we have to keep at it. And we have a lot of work to do.” Part of that path requires an understanding of what financial planners face, Milano says. “Be sensitive to other professionals’ regimens and regulatory bodies and have an understanding of what they are up against,” he says. Their circumstances are far more complex than in the reverse mortgage industry. “It is not as homogenous as we are or seem to be in the mortgage world. You will want to know what their policies and procedures are, so you don’t get them into trouble.” Historically, financial planners have had a negative view of reverse mortgages, he adds. But with more than $7 trillion in senior home equity in the country, equity release programs must be part of the mix, with the understanding that reverse mortgages are not for everyone. “These can be very powerful tools,” he says, adding that reverse mortgages can extend seniors’ financial longevity in some cases by a decade. “That is huge, because people are living longer, so educating financial planners is overdue. “Things are changing. Things are evolving. Minds are opening up,” Milano adds. “The biggest frustration in our industry is that it seems to be taking so long.” Some Background Giordano points out that the financial services field has been heavily regulated since the 1929 stock market crash and the laws that were put in place in the 1930s and 1940s to better protect investors. “The goal was to bring order and safety to the public,” she says. “The whole idea is to have greater transparency.” The financial services industry was then revolutionized in the 1980s with the advent of self-directed retirement plans, as companies decided they no longer wanted to be responsible for fixed pension plans. Since then, additional complex rules have been put in place to protect investors— who Giordano notes are the everyday people who hold those self-directed plans. They are the same people who need to consider equity release programs in their retirement mix. Baby Boomers who were part of that initial wave in the new systems are now retiring in great numbers, putting a spotlight on how well assets are being managed. Giordano points out that loan officers working with financial planners need to understand that proceeds from a reverse mortgage cannot be used to buy securities, such as stocks and bonds, where the risks for growth or for failing are not in the control of the homeowner. If an investment loses money, then the homeowner could face dire financial circumstances that could lead to foreclosure. “That is really dangerous,” she says. When talking to a financial planner, “You don’t ever want to be mistaken for being in there advocating that they take money out of a reverse mortgage and purchase investments. That has always been a problem.” However, reverse mortgages can set up a line of credit that provides cash flow if the stock markets are down, so the clients don’t have to touch those assets until mar- kets rebound. The approach with financial planners then Opportunities continued on page 28 Shelley Giordano REVERSE MORTGAGE / SEPTEMBER-OCTOBER 2021 27