You have a financial advisor and you’re in your mid-sixties and approaching retirement. Why hasn’t your financial advisor talked to you about
a reverse mortgage?
It is a very good possibility that his or her employer doesn’t allow the financial advisor to discuss reverse mortgages. In fact, they might have
a policy of fining advisors that do. That is exactly what happened to Zach Alkhamis of Retirement Wealth Management Group earlier this year.
There was a LinkedIn post about it and the reverse mortgage blog called “Reverse Mortgage Daily” wrote an article about it on April 23rd. The article
frames the situation as follows:
Alkhamis directed a client to a local reverse specialist to learn more about how it might improve the client’s situation. That specialist included
Alkhamis on a follow-up e-mail with the client, which contained a proposal for a reverse mortgage. In a routine audit months later, that e-mail
“Two weeks later, I received a letter from our compliance department. It was basically a slap on the hand, disciplinary action for discussing reverse
mortgages with a client,” said Alkhamis, who contested the $350 fine to no avail.
The story sparked discussion among industry professionals, many of whom shared their own stories of compliance shutdowns and expressed frustration with
what appears to be an institutional roadblock among the financial planning community.
As a reverse mortgage professional, I receive a number of referrals from
financial advisors, but I have also been told by numerous other financial advisors that they are not allowed to refer their clients to me due to company
policy. Prior to reading this article, I thought that 90% of the ones who said that were using it as an excuse to avoid investing the time to
learn about reverse mortgages. As it looks now, I was being somewhat harsh in my criticism.
I believe that most of the financial advisors who do refer their clients to me agree with Alkhamis when he says “I will always talk to clients about reverse
mortgages because I am a fiduciary and a financial advisor. If I know of a product that helps my clients have a better retirement, I will talk
to my clients about it. It’s the right thing to do.”
The reverse mortgage industry has spent a great deal of time and effort to educate the financial advisor community on the pros and cons of reverse mortgages.
We are meeting less and less resistance coming from the individual advisors, but we are then thwarted by their firm’s policies.
It can be very frustrating because there is more and more research pointing to the importance of home equity in retirement income planning.
I wonder how many company officials know that reverse mortgages are in the curriculum at the American College. A comprehensive financial plan cannot
ignore what is a lot of people’s largest asset.
Unfortunately, a number of people who could probably benefit from a reverse mortgage see that fact that their financial advisor doesn’t recommend it, and
in some cases won’t even talk about it, as a sign that it is a bad deal.
Hopefully, financial advisors whose companies do not allow them to recommend reverse mortgages can still let the people who might benefit from them know
the reasons they are not recommending them and advise them to do their own research. A couple of great places to start are: