Whether you are a financial planner, advisor, wealth manager, attorney or CPA it is time for you to get off the sidelines and participate in the Home Equity Conversion Mortgage (HECM) discussion.
Don’t know what a HECM is? (How embarrassing.) It is a federally insured reverse mortgage. Your clients are looking into these in increasing numbers they expect, need and deserve your advice.
Sitting on the sidelines or simply saying “Oh that’s a bad thing.” Doesn’t cut it. “ There needs to be an informed discussion and there needs to be alternative options. Retirees don’t live in a vacuum. They need to fund their retirement and if they can afford to be independent then someone else is going to have to pick up the slack.
Let’s look at the landscape. TV and the Internet are awash with reverse mortgage ads. All are promising what sounds like free money and each introduces prospects into a high pressure system designed to get them to apply no matter what.
Try surfing the Internet for information about reverse mortgages. Almost everything is either out of date or designed to sell you something. It is like the comedian Ron White complained, “The problem with buying a car is you have to talk to a car salesman. No one else sells cars.”
OK, maybe the person is lucky and they find me. I’m a HECM Specialist. Of course, I’m also a commissioned salesperson. What are my qualifications? Well zip. I have to be licensed as a loan officer, but that has precious little to do with being qualified to talk about retirement issues that can last a lifetime for a borrower.
Amazingly, in my 15 years of doing HECM’s almost no one I ever meet with involves an advisor. Why, because, you never invited them to. So they make their decision alone or they make it with inadequate advise from a professional who really doesn’t understand the issues of retirement or HECM’s either.
Consider this example. I had couples that were looking into a HECM because she couldn’t inherit his pension and he had COPD. They both understood that when he died, she would not be able to afford their home. The idea was to set up a HECM Credit Line to grow in the future for when she would be alone.
They went to their advisor who said, “Don’t do a reverse mortgage. They are bad.” No alternative plan was offered. No discussion about the fears of the wife, just a simple no.
No’s are cheap, but they don’t solve the problems in people’s lives. Your clients need more, they deserve better and it is simply good business.
So what am I advocating? That professionals step out of the sidelines and get into the game. Get informed about how HECM’s work. Stay current on the details. Let your clients know you have added this service to your practice. Tell them you are a safe resource where they can discuss this option and others.
Retirement in this economy is tough. Few are encountering what they planned for. We can’t solve all the problems but we should be at least equipped to discuss all the possibilities in and informed and unbiased manner.