In the reverse mortgage industry, the involvement of financial planners in referral partnerships continues to be seen as a strong avenue for generating a new reverse mortgage business as increased business activity continues given the added interest in the product category that the company has accompanied COVID-19 coronavirus pandemic is taking place.
However, many planners are either reluctant or resilient to deal with reverse mortgage professionals for a variety of reasons, including perceptions of the regulatory climate that may not always reflect reality or persistent reputational problems affecting the understanding of what is a reverse Mortgage can mean for a senior.
To that end, RMD has taken a closer look at some of the recent moves, both large and small, to see how successful the industry has been in bringing more financial planners on board as referral partners.
FAR and the FPA
Both Finance of America Reverse (FAR) and Fairway Independent Mortgage Corporation entered into high-profile partnerships with two leading financial advisory associations over the past year. In the case of FAR, last year announced an educational cooperation with the Financial Planning Association (FPA), in which the parties jointly start a series of educational programs. RMD asked FAR for an update on the progress of this partnership, and the lender said it was doing well with training planners.
“It’s going incredibly well,” said Kellan Brown, VP of Business Development and Strategic Partnerships for FAR. “FAR has its own retirement strategies department whose overall goal is to raise awareness of the use of home ownership in a retirement plan. This partnership perfectly combines these efforts. FAR prides itself on innovation, and this is exactly what financial advisors want to see when they come up with a broader approach to retirement. With the support of the FPA, we were exposed to consultants whom we could not have reached through our grassroots efforts alone. “
The pandemic has certainly hampered the partnership’s ability to expand into in-person events and business travel, Brown says, but the partnership is steadily advancing and pandemic conditions may have played a role in improving participation in other virtual collaborative organizations.
Fairway and NAIFA
For fairway is the Forged partnership with the National Association of Insurance and Financial Advisors (NAIFA) is to position Fairway as a subject matter expert in the NAIFA’s LIFP (Limited & Extended Care Planning) center and similarly create mutually beneficial educational materials to expand the presence of both FAR and NAIFA in home equity for retirement.
Fairway will provide educational materials for NAIFA sponsored events such as webinars, blog posts and print articles in the publication of the association’s Advisor Today magazine. In addition, Fairway subject matter experts will join the NAIFA’s National Speaker’s Bureau, and the two organizations will work together through the LECP center to advance the education of financial planners and consumers on a variety of mortgage-related topics, including increasing the involvement of home equity in retirement planning .
Harlan Accola, Fairway’s Reverse Mortgage Director, recently described for RMD that the partnership is progressing positively and needs to be critically positioned in a mutually beneficial manner: not just to provide reverse mortgage leads to Fairway loan officers but also to support NAIFA’s goals as an organization.
“We have the luxury of having 600 offices. No matter where there is a NAIFA location, we can send one of our employees in,” said Accola RMD at the recent digital event of the Sales & Marketing Forum. “Wherever NAIFA meets, we can [also] meet with them. […] There are 25,000 NAIFA members, and our goal is to have 1,000 fairway members within a year and a half by the end of 2022. Because that’s the only way we can help them. “
Accola explains that simply asking for leads from the organization is a recipe for a cold shoulder. There has to be a mutually beneficial agreement.
“They don’t go into NAIFA and say, ‘Hey, I’d like some pointers,” says Accola. “This is not going to work, and a lot of people have tried that. They come in and say,” What can we do about it How can I help you grow your business? “
CrossCountry Mortgage Partnership
The area of engaging financial planners in new ways isn’t just for the top 10 companies in the reverse mortgage industry, either.
In December 2020, CrossCountry Mortgage (CCM), a multi-channel lender, forged a new education partnership with the Society of Financial Service Professionals (FSP), an association of CPAs, lawyers, insurance experts and financial advisors from many disciplines. The partnership is specifically designed to educate FSP members about the reverse mortgage product category, specifically the Federal Housing Administration (FHA) sponsored Home Equity Conversion Program (HECM).
After Susan Pomfret, Senior Vice President of HECM Lending at CrossCountry, RICP, sponsored the 2020 FSP Institute, she gained firsthand experience of the importance of educating planners about a financial instrument that some clients have can help in a certain situation.
“Our mission is education. We were impressed by the company’s core values and provided industry experts and thought leaders with world-class educational opportunities,” Pomfret told RMD in an interview. “We work well together and when we started thinking about the best ways to educate the FSP audience it all seemed to fit together.”
While CCM reverse mortgage originators had reliable referral partnerships with financial planners prior to working with the FSP, the partnership will go a long way in easily completing educational plans as there is still a long way to go to train people outside of the FSP to reverse mortgage -Industry about the possible uses of the product.
Pomfret, who has been involved in the FHA Reverse Mortgage Program since her first HECM loan was granted in 1989, has seen the misunderstandings in many forms and knows that the road ahead may remain smoother, yet difficult.
“As you know, we have been fighting these misunderstandings for too many years. I still hear what I heard in 1989, and unfortunately we as an industry haven’t debunked these myths well enough, ”she says. “Confronting more and more financial service providers and their customers with these misunderstandings will certainly help clear the confusion out there.”
Academy for Home Equity in Financial Planning: suggested language for financial planners
Earlier this year, the University of Illinois founded the Academy of Equity in Financial Planning Urbana-Champaign published a publication with suggested guiding language for broker-dealers and investment advisors that could help guide planners’ interactions with reverse mortgage products.
The publication is the result of the work of many prominent financial professionals who have worked with the academy in the past, including Dr. Craig Lemoine, CFA Betty Meredith, Dr. Wade Pfau, Jamie Hopkins and others. The aim of the publication is to clarify the positions of organizations, including the Financial Industry Regulatory Authority (FINRA), and to describe how many broker-dealers previously lifted restrictions on the discussion of reverse mortgage products.
Hopkins previously told RMD when the publication first went public that he hoped the compliance departments of financial institutions would simply realize that it may have been a while since they updated all of the guidelines on reverse mortgages too do have. Now that he has received feedback from a few different compliance departments, there has been an abundance of feedback on both the positive and negative ends of the spectrum.
“But that’s a good thing,” Hopkins said in an interview. “On our part, this means that we are doing the right thing and having the right conversations. If there is a difference of opinion, that is actually healthy and good. I know loan officers told me they were sending it to advisors. Some advisors called me. But we’re definitely getting the kind of traction we wanted. We have some next steps and conversations planned, we want to start with a few larger compliance departments and some thought leaders and associations. We started these introductions last month. All in all, I think I’m very happy with that. “
The worst that could have happened, according to Hopkins, is that compliance departments and financial advisory firms fell silent after the model language was released. Thankfully, that didn’t happen, and passionate discussions, positive or negative, can still be productive, he says.
“It’s always good when you publish something, and it doesn’t just fall silent,” Hopkins told RMD. “Even on an angry phone call, it helps to talk about trying to move people forward in an area where some companies lack movement to update their best policies and procedures. I am very satisfied with that. I am proud of the academy for the work they put into it. However, I think things are going well right now, but we are definitely at a stage and some of our work is not done yet. “