How to contact financial planners about the inverse relationship to mortgage lending


There are rules for financial planners to interact with other professionals involved in the sale of financial products so that everyone is in charge of the client’s financial life, acting in the best interest of their client, but there are some situations where the financial planner may cite poorly informed or outdated points of view. on certain rules in conversations with a professional reverse mortgage lending specialist.

Says Shelley Giordano, director of enterprise integration at Mutual of Omaha Mortgage and founder of the Academy of Equity in Financial Planning at the University of Illinois at Urbana-Champaign. While many reverse mortgage lending professionals often describe difficult situations when trying to discuss with financial planners the potential benefits that a reverse mortgage can provide to their clients, sometimes reverse mortgage lending professionals can “shy away” from information that is misunderstood or no longer accurate. …

Giordano explains that knowing some of the more common cases where this occurs, it can make a difference for a reverse mortgage lending professional aspiring to become a referral contact for a financial planner.

FINRA Excuse

The Financial Industry Regulatory Authority (FINRA) has long been cited by some financial planners as the source of the idea that using the reverse mortgage product category is simply never the best solution. However, this position has changed significantly over the years, and many financial planners today do not seem to be aware of the rather marked change in the position of the authorities, according to Giordano.

Shelley Giordano

“[Many planners] will swear on one side and on the other that FINRA is not allowing them to talk, ”she explained during the National Reverse Mortgage Lenders’ (NRMLA) Virtual Summer Meeting this month. “Fortunately, Dr. Barry Sachs, who works at our Equity Academy in the area of ​​financial planning under the name FINRA. He found it terribly difficult to get in touch with them, but in the end he found someone and told them, “Your math is wrong.” So they changed it. Don’t get me wrong, this is not a loud endorsement of reverse mortgages. “

However, the influence of Dr. Sachs was enough for FINRA to reconsider its investor. bulletin called “Reverse Mortgages: How to Avoid Failures” to describe a reverse mortgage as something that the borrower should “use wisely.” This replaced the previous wording of the report describing reverse mortgages as a “loan of last resort,” but many planners seem to continue to cite this wording as a confirmation factor in their own resistance to discussing reverse mortgages. The phrase “last resort” no longer appears in the FINRA bulletin, although the current wording is far from enthusiastic approval, as Giordano notes.

“[FINRA says], “Use credit funds wisely.” And of course we all agree with that, ”explains Giordano. “We all strive to find a reverse mortgage that is stable and sustainable over retirement years. So don’t fall for FINRA’s excuse, it doesn’t exist. “

Leaving home outside discussion

In 2018, a fiduciary rule introduced by the Department of Labor under the Barack Obama administration was overturned by the Federal Court of the Fifth Circuit. This rule stated that financial advisors should provide conflict-free advice on retirement accounts and put the needs of their clients ahead of their potential compensation. Waiver of commissions on certain investment products was seen as a way to enforce this rule.

When he was released, the Securities and Exchange Commission (SEC) asked investors for information on how the payments to advisors were handled in constructing what later became known as the regulatory best interest (Reg BI) to ensure greater transparency about investing in the public. says Giordano.

“This means that if you go back and think about where the value of housing is in the average American’s bucket of assets, the Census Bureau’s housing wealth is two-thirds of the net worth of the average American,” she explains. “So if the SEC and all state regulators and everyone involved are demanding that financial advisors be more accountable, perhaps not at a fiduciary level, but more accountable, and clients and financial advisors who represent themselves provide at least comprehensive financial advice, if not fiduciary financial advice, then ignoring the housing asset is bewildering. “

It’s certainly not about openly challenging a financial advisor to exclude a housing asset from discussion, but she says it could be a way to have a more fully featured conversation with the advisor if or when the situation calls for it.


“I’ve been to meetings where financial advisors bragged about [about] get out of the house, ”she says. “Didn’t they read? Didn’t they go to their [Financial Planners Association (FPA)] meeting? Didn’t they read the manual from [the National Association of Insurance and Financial Advisors (NAIFA)]? Didn’t they read their magazines? It is truly shocking that today someone said this that [they] don’t look at the house. “

The main key to making this information available in preparation for your conversation with a financial advisor, Giordano said, is to remain cordial and receptive to what they have to say to the reverse mortgage lending specialist. However, she said, insight into how housing can affect a client’s financial position is something that should be on the table when an advisor asks a consultant to fully consider all of a client’s assets.

“Obviously, you don’t want to get into hostile relations with the advisors,” explains Giordano. “But you know, this is a decent conversation. What percentage of your clients own a home that is half to two-thirds of the value of all of their assets? What are you doing for longevity? What are you doing with market volatility? What do you do with contingencies? Reverse mortgages fit into all of this. We are not the only ones talking about this. It is the academic people in our Academy who really lead this. “

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