Forward thinking- in Reverse
Written by rmcinturff on Wednesday, November 12th, 2008 in HECM, HECM Research Statistics, Reverse Mortage, Reverse Mortgage Fraud.
Lets quickly say that this is not a conviction upon the financial advisory business, they have and offer so many programs that at one time or another were completely unheard of but are now completely brilliant and perfect for so many- even in this marketplace. House values have plunged and the pressure on the portfolio is at all time highs AT THE BEGINNING OF THE BABY BOOMER RETIREMENT PARTY! Talk about a lot of pressure. Now that’s a lot of pressure.
There are so many products and services out there that its impossible for a financial planning organization to attempt to offer all of them. Not only do their clients expect their advisors to give them top level advice on stocks, bonds and funds; they are also expecting them to be up to date on issues pertaining to aging and health. With folks living longer than ever and trying to squeeze more income out of longer time frames than ever before, its quite challenging for even the most accomplished financial planning organization to “keep up with the times”.
Different phases of financial planning happen at different times of a client’s lives but now on top of the asset value loss they are experiencing, its made more complicated by having to pay for much higher costs of college for their children and since their parents are living longer, the clients often become amateur caregivers as well and sometimes end up sharing some or all of the costs associated with caregiving. A recent survey found that wealth preservation, estate planning and investment diversification are among the top areas where advisors need more training. To put all of this in place would be “forward thinking” but where does reverse come in. Do the advisors have time for training or is their time best spent protecting their assets under management and their client base?
Reverse mortgages can bridge the gap between the old way of thinking about wealth preservation, estate planning and investment diversification by alleviating the pressure all 3 put on each other. With a reverse mortgage, the client above could focus on his children’s education and allow his parents to use the reverse mortgage to help faciliate their care giving. A healthy grandparent could help take the pressure off their children by using the reverse mortgage to help pay for college for the grandchildren. That sounds too simple but its not being considered enough within this fraternity. The financial advisor truly believes they have the tools to keep the retirement engine running for their clients but as the survey suggested, they could use some additional help in some of those departments. Forward thinking would be looking ahead with an eye toward improvement and beyond past experience and outdated traditions.
The reverse mortgage today allows homeowners 62 years or older to gain access to portions of their home’s equity to be used to bridge a gap, fill a void or even right a wrong. The stigma has to come off the reverse mortgage, over 200,000 seniors took out a reverse mortgage the past 2 years and there’s no way to calculate the emotional drag reduced by setting these programs in flight when FHA introduced the product 20 years ago. HUD keeps numbers on originations, and fees compiled and average lump sums taken at time of loan closing but do they keep all the thank you’s, hugs and blessings the folks are giving that are receiving these loans? There’s no way to calculate that. Is there?
This article was generously submitted by Rick McInturff