Financial planner shares journey of uncovering reverse mortgages and how to unlock greater participation
The financial planning community is often sought after by reverse mortgage professionals as a referral source, as planners can help provide the clarity needed by their clients who seek financial asset preservation and continued stability. This is especially true for those who can live on a fixed income, and is associated with the general lack of awareness – or even outright hostility towards – reverse mortgages that many people maintain.
Education is essential, as is a candid assessment of a person’s finances, which is why Robert Klein, founder and president of the Retirement Income Center in Newport Beach, Calif., Sees reverse mortgages as a way to secure the financial security of some clients. Having recently written a few columns on how reverse mortgages can be used in a comprehensive financial plan, Klein sat down for a new episode of The RMD Podcast to discuss how and why reverse mortgages make sense to consumers. financial planners for some clients to explore.
Klein’s own discovery of reverse mortgages as a tool
Klein’s career as a financial advisor dates back to the 1980s, when he worked as a chartered accountant (CPA) in a CPA firm. While working as a CPA, he became more interested in financial planning due to the specific client focus of this field, which led him to work for a large, innovative financial planning firm in the field of providing holistic retirement planning services.
However, with the passage of President Ronald Reagan’s historic Tax Reform Act of 1986, Klein returned to the CPA arena to update himself on all of the new realities that the legislation has brought to the tax system. American. He continued in the CPA field until he broke up to create his own CPA firm in 1989, which ultimately led him to found a holistic financial planning firm.
Regarding his discovery of reverse mortgages as a potential financial planning tool for seniors, Klein describes the work of a prominent reverse mortgage industry educator as key to his development as a planner who encourages its clients to consider the possibilities of reverse mortgages.
âAs a financial advisor attending conferences, I heard about reverse mortgages. As part of the educational process and over time, I realized that I needed to learn more about them. I just felt like they were an important part of planning for retirement income, âKlein told RMD in the new podcast episode. âAnd then, of course, I attended a seminar sponsored by Ed Slott. I’m a member of the Ed Slott Elite IRA advisor group, and he had Don Graves from the [HECM Advisors Group]. Don Graves is a reverse mortgage education expert and he spoke [about] basic elements regarding the importance for financial advisers to be involved in the [reverse mortgage] industry.”
Klein was influenced by Graves ‘description that real estate assets are a major component of many clients’ net worth, and it was through these presentations that Klein found himself in love with the subject of reverse mortgages and began to fall in love with the subject of reverse mortgages. Acquired a desire to learn as much about them as he could for a potential job in his financial consulting firm.
âFortunately Don offers a Certificate in Real Estate Certificate program, and I immediately took that and learned a tremendous amount about reverse mortgages as a result of it,â Klein said. âAnd I followed that up with reading, Don has two books on reverse mortgages: one for financial advisors, another for consumers. So that really ignited my enthusiasm with [the topic]. “
Soon after, Klein began writing articles for financial publications about the potential benefits reverse mortgages could present to some clients, including one for Retirement Daily on how reverse mortgages have become a stronger product. after enduring years of program changes passed on by the Federal Housing Administration. RMD covered this article when it was first published.
“[That initial article] was really meant to be an introduction to reverse mortgages, âKlein explained. “And by writing this article, it just reinforced everything I was learning about it and really got me excited about the whole subject.”
Reluctance of fellow financial planners about reverse mortgages
While Klein himself has taken the time and effort to educate himself on reverse mortgages, he acknowledges just as much as anyone that many other financial planning professionals harbor a series of doubts – some of which are practical, d others that stem from a negative bias – about the potential relief that such a tool can bring to clients in the right situation.
âIt boils down – in many cases – to lack of education,â he says. âThat’s the bottom line, whether it’s fixed income annuities or reverse mortgages. I am watching him [as stemming from the fact that advisors] have little time in the day and people like to focus on certain things. However, that said, a lot of the things we focus on are client-centric, and so as clients come to your office and talk about them more and more now, it falls to the financial advisors at get to tune in and expand their horizons.
The process of bringing more financial planners into reverse mortgage conversations also comes from how they can be compensated for giving product-related advice, an issue that doesn’t affect Klein as much. due to the fact that his company offers a more holistic retirement planning solution. than others, more general advisers who may have senior clients.
âIt’s difficult because there really isn’t a financial model established for it,â he says. âAs a financial advisor, I cannot be compensated by a reverse mortgage company for offering and selling a reverse mortgage to my client. I cannot receive any compensation. So the compensation I get from reverse mortgages is tied to all of my holistic service that I provide to clients which includes reverse mortgages as one of the things I do.
Yet on an anecdotal level, he notes from his financial planning colleagues that those who take the time to educate themselves on how a reverse mortgage can affect the financial lives of clients come away with a very different perspective. of those who cling to their misconceptions or fears as the last word on the matter.
âI discovered while talking with other financial advisors who do annuities or reverse mortgages, that those who have been educated about it and have incorporated it into their practice, they have a totally different attitude towards it. than those who don’t, “he says.” A lot of the attitudes I find, again, whether it’s annuities or reverse mortgages, come from misconceptions. A lot of them are what consumers own, but as financial advisors we have to be very careful. Our clients are looking for solutions, and since clients own a home at 62, this is when you you qualify for an HECM. It’s up to you [as a financial advisor] be up to date on this, [and potentially] to have a discussion about it.
Listen to the full conversation with Robert Klein on the latest episode of The RMD Podcast, coming soon.