GPS systems, planes and military equipment track the magnetic field and rely on accurate models of magnetic north to function properly. When the magnetic field shifts, the models must be updated to reflect the changes. “The current behavior of magnetic north is something that we have never observed before,” William Brown, a global geomagnetic field modeler at the British Geological Survey, says….
As a financial advisor, you can’t help thinking, these have been “interesting times”. As the principal source of counsel for many of your clients, the one person with the most detailed understanding of their past and current financial situations, you’re dedicated to prioritizing their best interests. Back when you were beginning your own financial planning career, as your clients approached retirement, they looked forward to monthly pension checks along with social security benefits.
Today, for those clients now in their sixties and nearing retirement, there are no pension checks in the offing. Despite the wonderful growth in their stock funds over the past couple of years, you’re finding they have a lot of concern about starting regular monthly or quarterly withdrawals of funds from their own accounts. Combined with the need to make decisions about the timing of their social security benefits, they confess with being “overwhelmed”.
For the majority of these clients, their one reassuring “stability” factor is their intention is to continue to occupy their homes; most have retired their mortgages years ago or are close to doing so. Generally speaking, they’ve updated their estate planning documents (for many, you’ve been part of these discussions); with your encouragement, most have made provisions for future healthcare needs.
Meanwhile, though, many articles these clients have been reading (and on which they’re asking you to comment) describe the markets as being “at an all-time high”. They are already dealing with the rising costs of food and fuel, and, mostly confused by all the political changes that seem to be happening just as they draw near to this embarking on the next phase of their lives, they are turning to you for reassurance.
As a financial professional, you’re in a position to effect a “polar shift” of your own – offering advice about a retirement planning strategy representing a “product” not offered by your broker-dealer or parent company. Even as your own reading and study are describing the use of housing wealth as a “critical tool for retirees looking to protect their lifestyle and legacy,” you have been fearful of discussing reverse mortgages with your clients.
Fact is, far from a measure “of last resort”, reverse mortgage planning belongs at the “front” of the retirement preparation process, beginning at age 62. Clients who apply now for a reverse mortgage on their home are putting into place an alternative source of monthly or quarterly income, allowing their retirement accounts and investment portfolios to fluctuate with the times, and mitigating the sequence of return risk that is their primary retirement concern.
With a reverse mortgage loan set up as an equity line of credit, your clients will have stop-and-start flexibility in terms of withdrawals of cash, with the un-borrowed portion of their Home Equity Conversion Mortgage line of credit growing at the same rate as the interest being charged on the loan itself. Without pressure to liquidate assets from either their qualified or personal investment accounts, the primary danger of sequence risk is removed from their “worry list.” Far from being a ‘last resort”, housing wealth can offer increased flexibility in the face of market swings and the timing of social security benefits.
It’s a polar shift, to be sure, for you as a financial advisor to introduce concepts outside the purview of a broker-dealer “product” list. Still, careful to explain that reverse mortgage financing is outside your own area of expertise, suggest to clients over 62 that they check with a reverse mortgage specialist.
As you see magnetic field shifting, update your retirement planning “model” to reflect the change.
https://mutualreverse.com/david-garrison
David Garrison, NMLS ID 1595194. Mutual of Omaha Mortgage, Inc. dba Mutual of Omaha Reverse Mortgage, NMLS ID 1025894. 3131 Camino Del Rio N 1100, San Diego, CA 92108. Indiana-DFI Mortgage Lending License 43321. Michigan 1st Mortgage Broker/Lender/Servicer Registrant FR0022702. These materials are not from HUD or FHA and the document was not approved by HUD, FHA or any Government Agency. Subject to credit approval. For licensing information, go to: www.nmlsconsumeraccess.org
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