Forging referral relationships with financial advisers is critical to helping reverse mortgage originators grow their businesses in 2016 and beyond. But if originators want any chance of having a serious conversation with advisers, they must familiarize themselves with the various financial planning research that has been published on reverse mortgages.
Knowing the ins and outs of reverse mortgage research can give loan originators the ammunition needed to engage financial planners in productive conversations, which could then translate into potential business-to-business relationships in the future.
The past year alone saw a plethora of reverse mortgage commentary from the financial planning community, including articles and blog posts on the “new” Home Equity Conversion Mortgage (HECM), as well as research papers published in prominent trade journals such as the Journal of Financial Planning and the Journal of Retirement.
Tracking down all of this vital research can be a challenge, requiring visits to different websites in search of particular papers or studies. So rather than spending a good chunk of time sifting through page after page of Google search results, RMD decided to make the hunt easier by compiling the most critical research on reverse mortgages in recent years, and where to find them.
For reverse mortgage professionals who are looking to open the lines of communication with financial planners, consider reading these key research items to familiarize yourself as you initiate conversations with advisers, financial professionals, seniors and their family members (Many of the following research pieces also include links to RMD coverage of the findings, in case you are looking for a more abbreviated version of the research mentioned):
“Reversing the Conventional Wisdom: Using Home Equity to Supplement Retirement Income” — Barry H. Sacks, J.D., Ph.D.; and Stephen R. Sacks, Ph.D. This paper examines three strategies for using home equity in the form of a reverse mortgage credit line to increase the safe maximum initial rate of retirement income withdrawals. (Journal of Financial Planning, 2010).
“Increasing the Sustainable Withdrawal Rate Using the Standby Reverse Mortgage” — Shaun Pfeiffer, Ph.D; John Salter, Ph.D, CFP, AIFA; and Harold Evensky, CFP, AIF. This study investigates maximum real sustainable withdrawal rates for retirement plans that incorporate the use of standby reverse mortgages. (Journal of Financial Planning, 2012).
“The 6.0 Percent Rule” — Gerald C. Wagner, Ph.D. This paper provides financial planners with a review of the relative merits of using a reverse mortgage as a retirement spending supplement. (Journal of Financial Planning, 2013).
“HECM Reverse Mortgages: Now or Last Resort?”— Shaun Pfeiffer, Ph.D; Angus Schaal, CFP; and John Salter, Ph.D., CFP, AIFA. This study outlines recent changes to the reverse mortgage market and investigates plan survival rates for distribution strategies that establish a HECM line of credit at the beginning of retirement and as a last resort. (Journal of Financial Planning, 2014).
“The Reverse Mortgage: A Strategic Lifetime Income Planning Resource” — Tom Davison, MA, Ph.D., CFP; and Keith Turner, Certified Reverse Mortgage Professional (CRMP) with Retirement Funding Solutions. This article explains how reverse mortgages work, using research showing that strategically combining reverse mortgages and investment portfolios can significantly boost sustainable retirement income. (Journal of Retirement, 2015).
“Incorporating Home Equity into a Retirement Income Strategy” — Wade D. Pfau, Ph.D., CFA. This paper explores six different methods for incorporating home equity into a retirement income plan through the use of a reverse mortgage. The paper also includes references and citations to past research on reverse mortgages. (Social Science Research Network, 2015).
Another valuable resource is “What’s the Deal with Reverse Mortgages?” (People Tested Media, 2015) written by reverse mortgage industry veteran and Chair of the Funding Longevity Task Force Shelley Giordano. The book, which references much of the aforementioned research, details the basic knowledge of the HECM program as well as more complex topics, including the impact of using housing wealth during retirement and how consumers can discuss reverse mortgages with their financial advisers.
And for more general insight, revisit RMD’s “Top Reverse Mortgage Financial Planning Stores of 2015,” which recaps last year’s most popular reverse mortgage articles with a financial planning twist, according to RMD traffic data compiled January 1—December 30, 2015.
Written by Jason Oliva
