Find out how brokers can partner with other financial professionals
The following article was supplied by Equitable Bank.
For mortgage brokers looking for new opportunities to grow their network and reverse mortgage business, diversifying referral sources is a great strategy.
Plenty of opportunities lie in forming alliances with professionals from other industries, such as financial advisors, and will not only give you a stronger network for referrals, but will also improve your value offering to clients.
How can brokers partner with other financial professionals?
Developing a referral network is an important path to success in any sales role. Financial advisors may not think of a mortgage broker as a natural referral partner, as accountants and lawyers tend to be more common two-way referral sources for them.
However, a mortgage broker with expertise in reverse mortgages can help a financial advisor preserve a client’s assets and maintain that client’s revenue for them, which can be very appealing to the advisor.
If a client is heavily drawing down their registered assets, like RRSP and RRIF accounts, this can trigger significant tax payable. Likewise with corporate investments or non-registered investments with large, deferred capital gains. A reverse mortgage could provide additional cash flow to avoid drawing down investments or having to sell other assets.
How to initiate the discussion
A broker may need to be creative to initiate a discussion with a financial advisor to develop a relationship. This can happen through direct or indirect channels.
A direct way to approach a financial advisor may be through outreach that benefits them. Many consumers, let alone those in the financial industry, do not understand the way a reverse mortgage works. By offering to educate a financial advisor or their team about the ins and outs of reverse mortgages, there is an immediate learning opportunity for the financial advisor.
Case studies can be an effective way to highlight the use of reverse mortgages. Many financial advisors have heard of these products only in theory, but they have not seen them in practice.
Developing a one-pager on reverse mortgages, what they are, how they work, and who they are meant for could be an effective way to get your material and your message directly into the hands of a financial advisor’s client.
Indirect methods to promote the use of reverse mortgages may include referencing them in newsletters, blog posts, or on social media. They are not talked about very much, so this can help a broker to stand out.
Independent financial advisors who do not work at banks may be more likely to look to third-party professionals like mortgage brokers for client needs, so may be the best group of financial advisors to target.
Looking beyond financial advisors
There are others in the financial industry beyond advisors who could be good referral sources for reverse mortgages.
These include:
Insurance agents. Although insurance agents are less likely to manage investments for their clients or may not have the same in-depth conversations with them, they can be a useful source of referrals. They know hundreds if not thousands of people that they talk to about financial matters. Making one connection can lead to multiple referrals. They also tend to speak to people following a health issue, a disability, or a death—all of which may be prompts to consider a solution like a reverse mortgage.
Realtors. Like insurance agents, real estate agents come across many potential reverse mortgage clients. They may be able to see the strategic use of a reverse mortgage to finance the purchase of a new home while remaining in an existing home or to delay a property sale until market conditions are more favourable to sell.
Lawyers. Lawyers may be generalists or may have focused practices. The best potential referrals from lawyers may be based on a client profile that could benefit from a reverse mortgage. For example, family lawyers who come across clients going through a divorce. A reverse mortgage may allow one partner to buy out the other and either remain longer in a home or avoid having to transfer other savings or investments to their ex-spouse.
Estate lawyers are also likely to engage in conversations with people who could consider reverse mortgages. As an example, a homeowner who wants to advance an inheritance during their life rather than upon their death, while continuing to remain in their home.
Accountants. For many people, their accountant is their most trusted financial professional. They are more likely to find tax reasons to defer asset sales that support the use of a reverse mortgage. Accountants more focused on tax planning than tax preparation are more likely to be involved in conversations with their client base that can lead to an introduction to a mortgage broker.
Knowledge is the most powerful tool
So, what do these financial professionals all need from brokers? The main thing is knowledge about reverse mortgages and examples of situations where their use can benefit a senior homeowner.
This lack of knowledge was highlighted in a 2021 working paper from HEC Montréal and Université du Québec à Montréal entitled Low Demand for Reverse Mortgages in Canada: Price, Knowledge or Preferences?
One of the highlights was that “a majority of Canadians do not even have basic knowledge about this financial product.” In addition, “Canadians do not seem to be able to distinguish in which situations it is advantageous to obtain a reverse mortgage.”
One of the authors’ survey results found that more than half (56%) of Canadians do not have basic knowledge of the fundamentals of reverse mortgages. Most financial professionals are no different. So, education is important but the best way to generate a referral is to identify an ideal client scenario they will remember.
Key takeaways
Financial advisors may be most likely to benefit themselves from a client using a reverse mortgage and tend to have more in-depth discussions about a client’s overall financial situation than others in the financial industry. But do not discount the potential to develop partnerships with insurance agents, realtors, lawyers, and accountants.
Generating referrals on a client-by-client basis can be time-consuming. Cultivating relationships with people who can refer multiple clients to you can help magnify your marketing efforts. Lead with education, leave them with an idea of your ideal client, and work to develop both direct and indirect messaging to referral sources.
Have questions or need a specific resource? Contact Equitable Bank’s reverse mortgage team today:
