I had coffee a few weeks ago with a financial planner who
told me off the cuff that many financial planners feel that
they are in competition with reverse mortgage consultants.
I asked him why and he said, " Because as financial planners
we feel the annuities are better for the seniors and reverse
specialists want the seniors to have the reverse mortgages
instead." I looked at the financial planner and said,
"what if we just got the senior what he or she really
needed instead of what we were actually selling?"
I told him the story of the best horse trainer in Wyoming,
who happens to be my brother, Jack. I asked Jack years ago
what made him a successful horse trainer. He said he had a
very simple mantra that he lives by and it seems to work
in everything he tries to do: He said, "Life is about
balance and respect and doing the right thing."
He said, when he trains a horse, the horse needs to
respect him and he needs to respect the horse - he has
to know when to spur the horse on and when to pull back the
reins and bit, and when to trot him and when to gallop him.
He said there is a fine balance and intuitiveness involved
in training a horse. Along with balance, he said it's
important for him to know everything about the horse to
make him the best.
My point with this story is that we professionals (mortgage
people, financial planners, CPAs, elder care attorneys and
estate attorneys) who strategize the seniors portfolio and
estate, need to know the client and his whole picture.
We need to know when an annuity or reverse is better
for him, if life insurance versus mortgage insurance or
term is best or a combination; and if a life estate, trust
or living will suffices. In addition, if the housing market
is better for his money or the liquid assets, or combination
of all. And most important, we need to identify what part of
his portfolio is out of balance.
If I visit a senior and he has an extensive financial
portfolio with liquid assets but his house payment is
killing him, I know he is out of balance. Financial planners
need to understand that if a senior is heavy laden in
mortgage payments, and an unforeseen tragedy happens, the
senior will be forced to drain certain liquid assets. If a
spouse dies or becomes seriously ill, the mortgage payment
becomes a heavier burden. It would seem to protect the assets
of the seniors, it would be better to have no house payment
in the seniors' golden years and protect their liquid assets
at the same time.
Many financial professionals and attorneys that I see, still
think the reverse is like it was in the 60s, 70s, and early
80s: that the bank has title, the bank can take the house away,
and the heirs are left with a mess. I have to explain to them
that since 1988 when National Council of Aging, AARP, Congress,
FHA and President Reagan changed all that by putting new
guidelines in place for seniors. It is amazing how many
professionals do not know this or understand the reverse
mortgage and yet, will advise them against it. This seems odd
to me, especially when the senior relays to me that he is
wondering if he should pay his utility bills that month or the
mortgage. It is important and essential that financial planners,
estate attorneys, insurance agents, and mortgage specialists
understand the basics of what each professional does and
respects the power of a well balanced and thoughtful portfolio.
Otherwise, we are leading horses with blinders on.
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