'Upstream' approach designed to bolster financial advisors' guidance
Finance of America Reverse has signed an agreement with Morningstar Inc. to become its first reverse mortgage education provider, company officials have announced.
The wide range of educational tools will be made available to some 150,000 financial advisors across the US through the Morningstar Advisory Workstation, officials said. The product is a web-based investment and financial planning system helping to fill a significant gap between financial advisors’ guidance and consumers’ expectations, they described.
Mortgage Professional America reached out to FAR’s president, Kristen Sieffert (pictured), for more insight. She described the importance of the agreement at a time when reverse mortgages are seeing a resurgence in popularity.
"In the current market, financial advisors are guiding clients through high inflation, increased health care costs, and rising interest rates,” Sieffert said. “Many advisors look at home equity as a solution of last resort and don’t realize the opportunities a reverse mortgage can create. If used proactively, instead of reactively, advisors and their clients will have additional retirement planning options when the market is fluctuating.”
According to FAR’s Home Equity Punch List, a very small percentage of financial advisors incorporate home equity into planning discussions with clients, FAR officials noted in announcing the pact with Morningstar. With FAR, financial advisors will have greater access.
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Sieffert echoed the sentiment: “Given where the economy is today and the well-documented challenges facing people in mid-to-late life, it’s more important than ever for mortgage professionals to partner with the financial planning world on home equity education. I’m proud to say that FAR is leading the way in this respect,” she said.
MPA has interviewed others in the reverse mortgage business, each of whom placed a premium on education for consumers choosing to undergo a reverse mortgage. Sieffert told MPA the company she heads also places currency on education, and the Morningstar pact is an offshoot of that long-held principle.
“As a leading retirement solutions company, FAR has leaned into an education-first approach to home equity. Education and engagement with financial planners have long been cornerstones of our mission at FAR and have led to vital paid partnerships with the Financial Planning Association and the Stanford Center on Longevity,” Sieffert said. “FAR launching this marketing relationship with Morningstar will strengthen both our teams as we provide financial advisors with access to education about our specialized products that can be used as a tool in retirement planning. This will help them deepen conversations with clients around home equity as part of their retirement strategy and empower more Americans to thrive in their later years.”
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A key difference in FAR’s approach with the Morningstar alliance is that the education will be “upstream” as opposed to “downstream,” Sieffert noted. She expounded on the point when asked whether education into reverse mortgages already exists as part of the lending process: “Yes, third-party counseling is required for all borrowers but that happens downstream as part of the application process,” she confirmed. “Our work with Morningstar is upstream of borrower counseling. It’s focused on education for the financial advisor, and this is about a systemic change. Financial advisors are not always deeply knowledgeable on the myriad of home equity products available to people over age 55.”
Such “upstream” educational efforts also ensure that information is being conveyed that may fill in some critical blanks consumers may have in their knowledge, she added: “They may also be missing practical examples of when and how home equity can help support a long-term retirement plan, so these discussions aren’t coming up in retirement planning – and they should be,” she said. “The resources and tools we provide at FAR will help advisors make that holistic financial strategy a reality for their clients, especially those with invested assets under $2.5 million who are more at risk of being knocked off course. Knowing how to incorporate home equity into a strategic retirement plan will strengthen the guidance that financial advisors provide to their clients.”
Ultimately, Sieffert added, FAR’s education seeks to separate the wheat from the chaff. There is still stigma attached to reverse mortgages, she agreed, that may have been misconstrued in early industry marketing.
“The thing I find most exciting about this collaboration is that Morningstar – one of the most recognizable names in financial education – sees the need for the financial advisor community to learn about these products,” she said. “There are still myths about what a reverse mortgage is and isn’t – and who should consider one. By educating financial advisors, we can better equip them to have informed discussions with their clients 55 and up about how their home equity can create pathways to a fulfilling and stable retirement.”
