Top HECM Financial Planning Stories of 2015

Consider these “sunrise” stories published in 2015 and start your study.

December 30th, 2015  | by Jason Oliva Published in Reverse Mortgage

For the reverse mortgage industry, 2015 was a big year for retirement research as financial planners, likely spurred by the arrival of the Financial Assessment in April, published a series of papers, studies and reports demonstrating the effective uses of reverse mortgages in retirement income planning—more than any other year in recent memory.

While RMD recently published its most popular stories of 2015 already, none of the top-10 posts included in this list featured articles on the many advancements of reverse mortgage financial planning research that surfaced this year.

Rather than let the tireless efforts of researchers fall by the wayside, the plethora of this research, which ultimately raises awareness of the effectiveness of reverse mortgages for both consumers and the advisers who work with them, deserves honorable mention.

That being said, here are the top-10 most read reverse mortgage financial planning articles of 2015:

  1. December 28 — Reverse Mortgage Heirs Are ‘Dead Wrong’ About Their Inheritance

Adult children often get skittish when their parents are taking out a reverse mortgage, mainly concerned that doing so will fritter away their inheritance.

Through the judicious and responsible use of a reverse mortgage, if used with the proper estate management in place following the borrower’s death, a borrower can actually provide heirs with a substantial bequest in the form of a securities portfolio, the money from which they may be eligible to receive tax-free, according to a presentation by one practicing tax attorney and reverse mortgage researcher at an industry event this fall.

  1. April 8 — Survey of Financial Planners Reveals Need For Reverse Mortgage Dialogue

A survey by The America Institute of Certified Public Accountants this year indicated that more than half of CPA financial planners said running out of money is a top retirement concern for their clients.

But while the survey took note of annuities and Social Security as stable sources of retirement income, the absence of reverse mortgages underscores a need for increased dialogue between the reverse mortgage and financial planning industries.

  1. August 3 — 3 Tips to Forging Reverse Mortgage Relationships with Financial Planners

While there may not be a “silver bullet” when it comes to reverse mortgage loan originators forging partnerships with financial planners, some were seeing major success through persistent, strategic efforts.

To learn some key tips for LOs to create relationships with planners, RMD chatted with Shelley Giordano, chair of the Funding Longevity Task Force, an organization that helps educate financial planners through various partnerships. Read the article to see what she had to say.

  1. October 29 — Reverse Mortgages are ‘Triple Win’ for Retirees, Advisors and Mutual Funds

Home Equity Conversion Mortgages (HECMs) can offer a myriad of benefits to the borrowers they server, but they can also be attractive to financial advisors and even mutual funds, according to one reverse mortgage researcher.

A small draw from a reverse mortgage credit line at the right time can increase the long-term growth of a person’s securities portfolio, which may include a 401(k) or rollover IRA account. For these reasons, reverse mortgages can benefit mutual funds and financial planners by providing their clients with extra duration of these securities accounts, said Barry H. Sacks, a practicing tax attorney in San Francisco.

  1. November 12 — How Tenure Payments Trump the Reverse Mortgage LOC in Retirement Planning

Various studies have shown how a reverse mortgage line of credit, when used as part of a coordinated retirement planning strategy, can add value to a retiree’s investment portfolio.

But while the line of credit option has garnered considerable attention in financial planning discussions, in certain situations reverse mortgage tenure payments can significantly improve a portfolio’s success rate even further, according to a study published in November in The Journal of Retirement by Tom Davison, a reverse mortgage blogger and financial planning partner emeritus at Summit Financial Strategies, Inc. and Keith Turner, a reverse mortgage advisor with Retirement Funding Solutions.

  1. November 11 — 6 Strategies for Using Reverse Mortgages in Retirement Planning

Following research published earlier in the week, which detailed the various strategies for using reverse mortgages in retirement income planning, another paper explored six specific methods of incorporating home equity into a retirement plan and how each strategy impacts spending and wealth of the borrower.

The paper published by Wade Pfau, a professor of retirement income at The American College of Financial Services, analyzes different reverse mortgages possibilities in efforts to provide financial planners and their clients with a deeper context for considering how to incorporate home equity into a retirement income strategy. A breakdown of the six strategies can be found on pages 8-9 of the original paper.

  1. October 26 — Reverse Mortgages Offer ‘Disruptive’ Retirement Strategy

Reverse mortgages, while they have been around for decades even before the Department of Housing and Urban Development formally created the HECM program in the late 1980s, today they are becoming a “disruptive” way to leveraging home equity.

In the spirit of Silicon Valley, where the term “disruption” has become a buzzword among tech companies looking to radically change the conventional way of doing certain tasks, reverse mortgages are disputing the long-held emotional attachments tied to the home and how home equity can be used in building retirement wealth, according to a webinar from the Financial Planning Association, in which Barry Sacks presented.

  1. September 21 — Reverse Mortgage Line of Credit is ‘Best Bet’ for Retirement Planning

As the reverse mortgage industry continued to grapple with the “loan of last resort” reputation in 2015, one associate professor of finance in St. Louis suggested that the line of credit feature may be the reverse mortgage product’s best bet in becoming a serious retirement planning tool in the eyes of both retirees and the financial professionals working with them.

A standby line of credit can offer borrowers, particularly those who are planning or the long-run and not seeking a last resort solution, the peace of mind in knowing that they will have funds, which grow over time that can be accessed for any number of reasons.

But while greater education still needs to happen to raise awareness of using reverse mortgages in modern-day retirement planning, the line of credit could be the ticket to helping the HECM ditch its “loan of last resort” reputation once and for all.

  1. October 14 — Standby Reverse Mortgage Line of Credit: A Retirement ‘Must Have’

In a similar vein to the third-ranked financial planning story of 2015, the standby reverse mortgage line of credit strategy has been touted as a “must have” in the eyes of financial advisors and their clients—and that is primarily thanks to the HECM program changes over the last few years, which have changed the way reverse mortgages should be perceived in modern day retirement planning.

  1. November 9 — New Paper Spells Out Reverse Mortgage Strategies for Financial Planners

If you haven’t caught on by now, most of this top-10 list has focused on the need for the reverse mortgage industry to build a bridge with the financial planning community. And while much of this list has harped on the need to educate planners on the benefits of reverse mortgages, it’s only fitting that the most-read financial planning article on RMD in 2015 would be about a paper published in The Journal of Retirement.

The paper authored by Davison and Turner (see #6) provides a comprehensive catalog of the various strategies in which a reverse mortgage can be used effectively in retirement planning today.

Davison and Turner draw from a slew of previously published research from established reverse mortgage researchers such as John Salter, Harold Evensky and Shaun Pfeiffer, who have studied the “standby” reverse mortgage line of credit strategy; as well as other notable researchers, including Wade Pfau and Barry Sacks, whose respective research has focused on the synergies produced by a reverse mortgage credit line when used as part of a comprehensive retirement planning strategy.

“Overall, the major positive surprise is the value reverse mortgages can add to the lives of retirees, both those who already look forward to a satisfying retirement and those who are not as well prepared financially but will make it through,” wrote Davison and Turner. “This bodes well for a country with a rapidly expanding and aging retiree population.”