This is according to Martin Andelman, producing branch manager and trainer with HighTechLending in Orange County, Calif. Hosting a presentation titled “You’re Doing It All Wrong: Different Takes on Marketing HECMs to Trusted Advisors” at the National Reverse Mortgage Lenders Association (NRMLA) Western Regional Meeting last week, Andelman sought to reorient the way that loan officers envisioned reverse mortgage products so that they can retool the audience they try and sell them to.
“I apologize in advance for everything I’m about to say,” Andelman joked, before explaining his philosophy on the reverse mortgage itself and how he views any shortcomings loan officers have in properly communicating its benefits to people.
“First of all, the HECM is a perfect product,” Andelman says. “It does exactly what it says it’s going to do every single time. What’s happened is the industry has positioned it like it’s one step above food stamps.”
He then took an interactive approach to the presentation, asking the assembled reverse mortgage professionals if they’re transparent when meeting a new acquaintance about exactly what business they’re in. Largely, the point Andelman sought to make was reinforced: instead of saying that they sell reverse mortgages, someone is more likely to say that they’re simply in the ‘mortgage’ business or, more generically, in ‘finance.’ This compounds the product’s reputational issues, Andelman says, as does the product’s common positioning in television advertising.
“Watch TV for 12 minutes, and you’ll get an ad that begins ‘If you’re strapped for cash…,’” Andelman describes.
Positioning people of lesser means who hypothetically have a lot of home equity is not a sustainable course for marketing reverse mortgages, Andelman says, which also complicates the attempted connections a loan officer may attempt to make with a trusted advisor. By focusing attention on finding people of lesser means who also happen to have a lot of home equity, “that’s like trying to find children who own cars,” Andelman says.
Andelman also emphasized that the old “rules” around retirement – where someone would work for thirty years and have a pension waiting for them at the end of their career – have changed.
“Today, retirement is measured in decades, not years,” he says. “Is it possible to plan and go thirty years without income? No. Nobody can go that long without income. You’re not Warren Buffett, you’re hometown buffet. Following all the ‘rules’ of saving for retirement didn’t work. It’s not that you were irresponsible, things just changed.”
Changing the focus
By the time a senior reaches the age of 62 and if they have some money put away, the chances increase that they have a lawyer, CPA or financial advisor they would turn to that could advise them on what to do if contemplating a reverse mortgage, Andelman says. Because of this, he shares a guiding philosophy: “you have to become a trusted advisor to trusted advisors,” he says.
Turning the focus of new business away from people of lesser means leads to a lot of potential to change the overall direction of the reverse mortgage industry, Andelman says. “This business will change as that perception changes.”
Andelman also described a method designed to appeal to trusted advisors and the language they speak on behalf of their clients.
“Stop telling everyone how [a reverse mortgage] works,” he says. “Nobody cares. Start talking about what it does, the application of the product. It’s not about how it works, but what it does.”
How to speak the language of trusted advisors
Financial advisors don’t have any reason to care about the mechanics of how a reverse mortgage operates, Andelman says. They’re focused on only one thing: what it can do to make their clients more financially secure through the actual application of a possible financial tool. If a reverse mortgage loan officer goes into a conversation to specifically address the product’s reputational challenges, that’s a problem waiting to happen, Andelman says.
“If you’re talking to financial advisors and give them an example of the ways the product can work, and relate to them, then that [speaks to them about] their client,” he says. “The likelihood goes up that they will take [that information] to their clients.[…] You don’t talk [to trusted advisors] about the specifics of PLFs, or how the product is ‘much safer now.’”
When it comes to lawyers, CPAs or bankruptcy attorneys, Andelman encourages reverse mortgage LOs to “go talk to them.” Bankruptcy lawyers, he explains, often have no trouble bringing up the idea of a reverse mortgage. “They’re a very motivated audience, so go see them,” Andelman says.
In terms of approaching CPAs, that’s an audience that primarily wants to hear about creative solutions to financial problems, Andelman says. That creativity doesn’t work on everyone, however.
Talking to financial planners
“CPAs and lawyers love creativity, but not financial planners,” Andelman says. “Financial planners are far more concerned about the risk of loss than they are excited about the prospect of gain. They get paid 50 basis points on the assets under management. As long as they don’t screw something up, those clients will never leave.”
When talking to financial planners, Andelman encourages a process because they are process-oriented people, he says. Simply asking a financial planner for a sales referral doesn’t often lead to success, either.
“If you’re a reverse originator who talks to a financial advisor, and you close by saying, ‘Here’s my card, let me know if you have any clients I can try to sell them to,’ you’ll never hear from them. It’s never going to happen,” Andelman says. “Financial advisors will never let you go to their client and sell them something.”
Instead, if a process provides a way of comparing where an advisor’s client is now with the potential impact of using the HECM or other options, that helps to illustrate the possible benefits of incorporating a reverse mortgage into the financial strategies of a client’s portfolio, Andelman describes.
“Nothing worked out the way it was supposed to work out,” Andelman says. “Forward mortgages were never designed for old people, but that’s what too many of them have. We can change this. It’s not rocket science.”