Reverse mortgage lender Finance of America Reverse (FAR) and the Financial Planning Association (FPA) recently announced a new partnership, in which both organizations will collaborate on new educational materials designed to give financial planner professionals a greater understanding of reverse mortgage products, and the incorporation of home equity into retirement planning.
The new partnership has been in the works for the better part of six months according to FAR, and stems from previous collaborations the two organizations have had on smaller scales. While it’s still very easy to see the reasons that many financial planners remain skeptical of discussing reverse mortgages with their clients, recent strides made on both the product and regulatory fronts likely warrant a second look by planner professionals, according to representatives from both organizations.
Origins of the partnership, anxiety of financial planners
While collaboration between FAR and the FPA is not new in and of itself, more serious conversations about broader collaboration at the FPA’s last major annual conference, according to Sherry Apanay, chief development officer at FAR.
“We’ve been working with the FPA for several years now and discussions about a larger partnership started at last year’s FPA annual conference,” Apanay tells RMD. “The FPA team observed Steve Resch’s session [at that event] and felt it was differentiated from every other reverse mortgage presentation they’d had in the past. The key was in teaching through real-life examples rather than delivering a slightly disguised sales pitch. The FPA team seemed impressed by the way FAR was approaching their membership.”
While Resch’s approach turned heads at the conference last October, it’s no secret that many compliance controllers like broker-dealers and investment advisor firms have often not allowed financial planners to discuss reverse mortgages with their clients. Still, notable strides that have taken place must be taken into account when relating the potential advantages of home equity to financial planners, according to Evelyn M. Zohlen, CFP and 2020 FPA Chair.
“For a variety of reasons, financial planners have viewed reverse mortgages as a tool of last resort in helping their clients secure their financial future,” Zohlen says. “Through a combination of product improvement and improved education about the myriad applications for reverse mortgages, planners are looking at them with renewed interest and a clearer understanding of the role they can play in their clients’ lives.”
Effects of the coronavirus pandemic on planners’ receptivity
When asked if the current crisis related to the COVID-19 coronavirus pandemic has had an effect on the way that financial planners may be exploring options to help clients preserve some of their assets, Zohlen confirmed that at least in terms of the necessity to find new solutions, new urgency is absolutely present among both planners and their clients.
“The current crisis has created an ‘all hands on deck’ moment with planners taking a hard look at all of the resources available to help their clients navigate the current market and economic downturn,” she says. “Home equity is a large asset for many retirees and many planners consider it a part of their clients’ comprehensive financial strategy. It can be particularly helpful in providing liquidity in a down market to allow invested assets time to recover.”
The ability to rely on the liquidity of a reverse mortgage is something that is present in the new educational materials, she adds.
“This is just one use of a reverse mortgage that planners are learning through enhanced education opportunities with FAR,” Zohlen says.
Also helping planners learn more about ways in which reverse mortgages can help their clients is a general attitude in which they are always having to learn about new financial instruments, which generally makes financial planners more amenable to discovering new avenues to mitigating loss in their clients’ portfolios.
“Financial services, products and strategies change rapidly so planners must be lifelong learners to bring these new (or better understood) opportunities to their clients,” Zohlen adds. “One of the greatest challenges for planners is identifying the most reputable and reliable sources of information. The partnership between FPA and FAR helps answer that question when it comes to best practices and creative solutions involving reverse mortgages.”
Availability of materials, how originators factor in
The first of the educational materials resulting from this partnership became available on April 22 in a webinar that can be taken for continuing education credit, Zohlen explains. Further iterations of the learning course, along with supplemental content will make their way into FPA publications and events over the next two years, she says.
FAR has also selected a class of loan originators who will be specifically equipped to handle any new inquiries that can arise from this new partnership, according to Apanay.
“FAR has a dedicated group of loan officers who will handle inquiries arising from the company’s FPA partnership,” she says. “We have hand-picked loan officers who embody our standard of service, are equipped to work closely with financial advisors to find optimal solutions for their clients and have been trained by the same FAR experts collaborating with the FPA.”
Culmination of strategy
FAR has been reaching out to the financial planning community for several years in regards to making more materials available to them, in order to explain the potential value that a reverse mortgage can bring to their clients. This partnership represents a major step forward in accomplishing that goal, Apanay tells RMD.
“We’ve been diligent in our outreach to the financial planning community for the last four years and focused on educating advisors about the different uses cases for a reverse mortgage,” she says. “This partnership is the culmination of these strategic efforts and will allow FAR to educate more advisors about the situations where a reverse mortgage could be beneficial for their clients.”
Because of that, FAR is very focused on what future business can result from this partnership as more financial planners become aware of what reverse mortgages might be able to bring to the tables of clients.
“We’re really pleased to be able to work with the premier governing body for financial planners in the U.S. and are excited for the opportunities this partnership will bring in the coming years,” Apanay adds.
