Chris Clow/RMD: Comparing the conversations we seek to have with financial planners in 2019 and 2020, how have they changed? You say they’ve gotten better, but are there any special ways to make connecting with potential partners easier?
Steve Resch: Well, I think a lot of research has been published, thanks to Wade Pfau, Jamie Hopkins and others who have published research. Advisors have read this, they are hearing the message.We are a cornerstone partner Financial Planning Association (FPA), I do webinars for them, speak at their conferences, and they’re starting to hear the message and they’re absorbing it.
One thing about consultants is that they are slow and can take a while to complete. [come around]. Back at the conference in 2019, we would be there and people would come up and ask, “What is American Financial?” and I would say, “Well, we work with home equity,” and they would say, “Oh, reverse mortgages. ,” then turned and walked away. Now the situation is exactly the opposite. …”Oh, reverse mortgage, that’s great. I want to talk to you about it.”
So, the whole tone of the conversation completely changed. We weren’t embarrassed to be there and hoped someone wouldn’t leave us. Instead, we’re excited to be in these meetings and people are excited to have us, step up and start conversations.
Clow: What do you think industry professionals should remember most when looking for a financial planner partner?
Resch: I think the biggest thing, and I see this a lot when I talk to industry professionals, is that there is an intimidation factor about working with the consulting world.That shouldn’t be there, because the truth is [mortgage professionals] There are products that consultants can use. I don’t think our industry professionals need to know all of the financial planning apps out there. Advisors will figure out how to handle it. Advisors had no idea how the program worked. We can tell them over and over again, but they don’t know.
This is where tools, like our Illustrator, come into play. I sit with consultants and graphically show them how our stories develop and compound. You can see the lights on in their heads.Like, “I knew a curve, but I didn’t realize it could [work a certain way]So I think my message to industry professionals is, know your product, know how it works and focus on that. You have a unique opportunity to help an advisor incorporate home equity into your financial plan. This is what their conversation needs to be about.
Clow: Easier said than done? What’s a good first step?
Resch: I would look back at how I first got involved in this industry. A loan professional came to see me in my financial planning office. He asked me if I could better secure or enhance my clients’ retirements if I had access to a few hundred thousand dollars.
I immediately thought, “Oh my gosh, none of these clients of mine have long-term care coverage. They don’t have the backup capital to deal with poor returns. I don’t know that there is a tool that can help me bridge these gaps.”
So that’s my message to industry professionals: Know your product, understand it deeply, know it inside and out, and be able to go to an advisor and discuss what they might have to say about certain gaps in a client’s financial plan solution.
Clow: What steps can industry professionals take at the local level to start reaching out more to the planners around them?
Resch: Well, I think they should all get involved with their local financial planners association. There are associations all over the country and many reverse professionals are involved. The consultants definitely know them—they’ve seen them at conferences, luncheons, or whatever. So, I think that’s something you really want to be part of the local consulting community. The FPA is probably the largest in the country.
Kuro: What did I miss? What do you think our industry audience should know most about this topic that we haven’t already covered?
Resch: I think it’s really just understanding, like I said before, how the program works. Although we talked to the consultants about the project, the consultants had no idea how the project would work. Understanding their needs as a consultant is critical. One of the big challenges is managing long-term care. Another is cash flow management and repaying your existing mortgage.
To that end, we’re seeing some limitations due to changes in principal limits, but it’s also a very good opportunity to talk to an advisor about canceling your mortgage payments. Another opportunity is HECM Purchase (H4P). Planners often don’t realize they can take advantage of this, and many of us are dealing with gray divorce scenarios right now. Another scenario where it really comes in handy is relocation.
Clow: H4P is a bigger topic today. How do you see it becoming more popular?
Resch: I can tell you a simple example. The mother of one of my clients. She and her husband have retired to Florida, where they have lived for 15 years. Later, the husband passed away and the mother was left alone. She wanted to move back north to be closer to her children.
She has two options: spend her investment assets (which provide her with income) to buy the house she wants, or buy the opposite and keep all investments and let them continue to generate income for her.
Relocation will also be a big deal because many people move to Florida and when one spouse dies, they move back to be closer to family. So, I think there’s a huge opportunity there. Gray divorce, mortgage foreclosures, and managing long-term care risk—those are really the biggest opportunities in my opinion.
