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Over the past several years, the reverse mortgage industry has sought to make progress with financial advisers. The industry views these professionals as a key constituency for referrals and wants them to understand the potential power of incorporating a reverse mortgage into a client’s holistic financial plan.
But more recently, the momentum on that front appears to have slowed — and it could be because these conversations are happening less frequently.
This is according to Wade Pfau, professor of retirement income at the American College of Financial Services. Pfau spoke with HousingWire’s Reverse Mortgage Daily (RMD) about the potential role for Home Equity Conversion Mortgage (HECM) products in light of recent tariff-induced market volatility.
“I would say closer to five years ago, I did see a lot of evolution with advisers becoming more open to [reverse mortgages],” Pfau said. “More recently, it’s not that advisers are becoming less open or anything. It just seems like all the … momentum around reverse mortgages [may have slowed].”
Pfau, whose academic work has long been lauded by the reverse mortgage industry for its ability to communicate the potential financial planning benefits of the product, said that his conversations with advisers about reverse mortgages have slowed. This doesn’t negate the potential openness that advisers may have to the product relative to pre-pandemic days, he said, but there is still work to be done on this front.
“I think a lot of advisers are not open to the idea that this can make sense,” he said. “They still may not be using them too frequently. Certainly, more advisers are using them, but at the same time, new HECM issues every year seem to be going down.”
Pfau said that advisers tend to be open to the idea of reverse mortgages for their clients, or “at least they don’t view them as a scam like they may have in the past,” he said. “However, they’re still not necessarily using them a lot more frequently, and the momentum that we saw about improved adviser perceptions, at least from my perspective, seems to have slowed down in recent years.”
In an interview with RMD last year, Steve Resch — vice president of retirement strategies at Finance of America (FOA) — said that financial advisers have a higher level of receptivity toward the product when it comes to the specific goal of paying for long-term care.
“[A] lot of what we do with the advisers involves using home equity for strategic planning purposes, and that doesn’t really go away in high interest rate environments,” Resch said in May 2024. “We have still had numerous conversations and activity with the advisers.
“However, we’re finding — and I’ve seen this for a while, and it’s becoming more and more prevalent — that the most receptive part of our conversations is the use of home equity for long-term care management.”
