Start-up to launch online advisory platform that addresses the changing needs of the fastest growing market segment in the financial services industry
New national start-up Boom Financial Inc. has announced the upcoming launch of its online platform, geared towards the financial needs and well-being of Canada’s growing senior population.
The platform is expected to launch on Wednesday, December 18th.
Boom Financial works with clients aged 55 and older, offering them free access to easy-to-use financial health tools, as well as competitive rates on home equity lines of credit, refinances, reverse mortgages, new first mortgages, insurance and investment products.
“Our aim is to be a customer centric, top of mind brand in the fastest growing financial service market segment in the country. Our playful branding and market profile will reflect the sensibilities and youthfulness of our clientele, something we haven’t seen in the industry to date,” says Boom founder Christopher Lloyd-Smith.
One of Boom Financial’s primary objectives is to foster a positive dialogue around the reverse mortgage product, which is only offered through two Canadian lenders, neither of which is a major bank. Reverse mortgages represent a growing market segment in Canada’s trillion-dollar mortgage industry and have been a hot topic lately as Baby Boomers transition into senior citizens.
Data from the Office of the Superintendent of Financial Institutions (OSFI) shows that reverse mortgages are on the rise in Canada, with $3.78 billion in reverse mortgage debt outstanding in July 2019, just over 26.24% higher than the same month last year. This trend has continued into the fall.
Despite this, old stereotypes around reverse mortgages still prevail.
“People hear reverse mortgage and they still think about elderly individuals signing their equity away,” Lloyd-Smith said. “We see its potential as a financial apparatus that presents a new generation of seniors with an opportunity to put their home equity to work in the present, while maintaining their lifestyle, pre and post retirement. Downsizing should be a last resort if the client wants to stay in the family home. There’s going to be a growing demand for the product and we want to effectively market its benefits.”
The reverse mortgage product has received some criticism for its higher interest rate, but Lloyd-Smith sees it as an opportunity to simultaneously create wealth and maintain lifestyle while not being held to a monthly payment. He adds that there’s also an idea floating around that retirees have always made sound financial decisions and are financially well-prepared for retirement, which is “absolutely” not the case across the board.
Because the reverse mortgage is a somewhat niche product, not every broker understands it or even feels the need to do so. Lloyd-Smith says that there isn’t a lot of easily-understandable and accessible research on the product available online for consumers, which presents a perfect opportunity for the broker community, as long as brokers pay close attention to the need.
“I think it is going to be the most sought-after financial product available in the next 5-10 years. I 100% believe that,” Lloyd-Smith said. “It’s not available through a major bank, so there’s the opportunity right there. If you can’t get it at a TD or a CIBC or an RBC or what have you, then you’re already at the front of the line to sell it and push it. Understand what it is, understand who needs it, and start marketing it. Seniors, and the boomers specifically . . . they really want to be heard.”
Boom Financial has a high comp client referral program in place for brokers and agents, and has plans to extend into real estate services by Q3 2020 with its Boom Home brand.
2020 is the year that the last cohort of baby boomers are turning 55, and over the last 6-8 months, Boom Financial has performed focus groups and market research to determine a few different borrower profiles within that 55+ demographic. One of the most striking things that the team noticed during their research was that so much focus, effort and energy has been spent on millennials that boomers felt as if they had been left behind. The tools available on Boom Financial’s new platform are designed to help manage the different borrower types and their individual needs.
Nearly half of baby boomers want to learn more about what is involved in transitioning toward retirement, according to a recent study from Toronto-based Mackenzie Investments, and the Boom Financial team found this as well. Boomers wanted to know how they were going to live for the next 20 years, and whether there was an easy way to figure out their options.
In addition, Canadian seniors are using technology in greater numbers than ever before, according to Statistics Canada. A 2017 study published by Statistics Canada reveals that among 65- to 74-year-olds, internet use rose from 65% to 81% from 2013 to 2016, while among those aged 75 and older, usage rose from 35% to 50% over that same three-year period.
“People in their 60s now feel like they’re in their early 50s,” Lloyd-Smith said. “This is a very youthful generation of senior citizens. . . don’t forget about them. They’re there and they represent a huge piece of the market—they’re the biggest piece of the market. Whether they need a reverse mortgage, they may not, but they’re definitely going to require financial tools in the forms of home equity loans or remortgaging or an overall consultation and advisement of what they should be doing as the enter the second stage of their life past retirement.”
To satisfy those seniors who still want face-to-face online interactions, Boom Financial plans to open multiple standalone locations in major cities across Canada throughout 2020 and 2021.
