A little “inside baseball” for you…

Yes, this is directed to those of you who have worked EXTREMELY HARD, and LONG, and achieved a level of credentials that would take the remainder of my life to achieve; My hat is off to you, and I deeply regard your professional commitment to your Clients through your Practice.

A little about myself…I have over 35 years experience in Financial/Estate and assets under management experience; I had over 5,000 Clients in Greater N E Ohio and did basic retirement planning for many, many inner-city folks. Some of my most heart-rendering moments were having testimonials in large group meetings when several of those I had helped only 2-3 years earlier stood up and declared that “due to my help, guidance and coaching, they were the first members in their families HISTORY to ever save $1,000.00.” I learned “planning under fire”, and had a mere 15-20 minutes to hear, reconcile, and recommend a course of action and then get them out of my chair and back to work on company time, on company premises. My follow-up involved visiting these companies on an ongoing basis to review previous plans and make adjustments additions, or even just remind them what they were doing is working, and to just keep on hangin’ on. In one company (GCRTA) I converted over 1 MILLION dollars in IRS return checks into payroll deduction mutual funds using “Circular E” to correct the allowances in just a YEAR. It completely changed the dynamic of those employees. Most of those accounts are still active 15-20 years later.

in 2012, An old friend of mine from “The Business” approached me with a new idea and expressed how certain he was about the chances of my success…and he introduced me to the FHA HECM HELOC program. He was correct, and I began working with him originating the FHA HECM HELOC program (“Reverse Mortgages” for those of you with credentials). He was correct; I was an immediate success (flying by the seat of my pants) but succeeding for only the reason that I UNDERSTOOD the program from a strong financial planning perspective, and the importance of using non-recourse home equity to enhance and secure an (otherwise) dicey retirement plan. Most of my efforts to develop prospects came from my personal observation and a couple centers of influence. I tried discussing the Reverse with MANY of you credentialed sorts, and was soundly buffeted for my efforts. Really, many of you were quite closed-minded (even) to the point of being unnecessarily rude (I forgive you) 😉 The rest of you listened politely, and were cordial to hear me out…all the wile, I’m wondering if I live in a parallel universe…All of you mentioned a little history of Reverse mortgages in your credentialing (specifically, the “Retirement Income Certified Professional” (RICP) seems to go a LOT deeper into this topic than any of the other credentials.

I recently decided to engage the “American College of Financial Services” in “King of Prussia, PA” (on-line, of course) for several reasons. Knowing the process and intentions for setting up successful retirements when I’m working with a retirement loan program seems like a very logical and forthright thing to do. Another substantial reason for taking on this significant course is to learn how the American College perceives the Reverse Mortgage program. Candidly? It is amazing to me to see such a wonderful and incredibly powerful financial and strategic planning tool held in such disdain by so many Financially credentialed planners. It is irrational to me.

To wit-some of the idiosyncrasies I’ve seen even recently…

1. When the market crashed 2 months ago? Planners were holding their crying and scared Client’s hands instead of using the reverse mortgage to buffer accounts and protect wealth from Sequence of Return risk exposures. Such an OBVIOUS and simple thing to do…

2. Recent disclosures from the Health and human Services Agency (H&HS) Stated that “Social Security is out of money, and that current levels of benefits can only be sustained until 2034”. An OBVIOUS strategy is to incorporate Reverse mortgages to free up equity so tenure equity payments can be structured and developed in the 14 years before this event hits…Crickets.

3. Recent interest rate corrections have created a remarkable opportunity for 62+ Clients to move their mortgage debt from “working class mortgage debt” to “Retirement Class mortgage Debt” by using simple arbitrage techniques made possible by the non-recourse structure of a Reverse Mortgage. Again, not a PEEP.

4. Statistically, the average American at retirement has home equity to savings/investments ratio of approximately 5:1. Sadly, you’re only concerned about the ONE. Virtually ZERO attention is given to the concepts of converting from “Working Class Mortgage Debt” to “Retirement Class Mortgage Debt”. And, they’re sitting RIGHT IN FRONT OF YOU.

5. When it comes to “Portfolio management”? Wouldn’t making the house payment (typically 30-35% of the income stream) disappear and reduce the drag on the asset growth seem to be a rather “first-thing-to-do” kind of advice?

A couple weeks ago, I invited several hundred (approximately 6-700) of you (RICP’s primarily) to a webinar forum on Retirement planning uses for the Reverse Mortgage”. None of the CFP’s or CLU’s or CPA’s we invited attended; 9 RICP’s did. It lasted for 57 minutes; not a SINGLE person left, and all 9 stayed for an additional 20+ minutes for Q&A! WHY???

I’m sure they had other things to do, it was being held at 2pm EST, so there was still a lot of daylight to work…Here’s the fascination…ALL of them responding stated they were not working with anyone regarding the Reverse mortgage, and after hearing a concise delivery of capacities and strategies? They were eager to work with US to help their Clients. They ALL admitted they had never heard of these ideas, and had no concept of how to do them. This was (truly) a revealing hour for all of them.

I’m now 55% of the way through the first of 3 chapters of the RICP course. There has been several chapters that dealt with the Reverse in retirement planning, and here’s what I want to share with you…

1. If what you know about Reverse mortgages came from this RICP course of study? MOST OF MY BORROWERS know more than you do after they complete their mandatory counseling. I mean this literally-MY BORROWERS can advise you on reverse mortgages and you would learn great techniques and concepts from them.

2. The course has several opportunities to discuss the different types of FHA reverse. The course says nothing.

3. It doesn’t refer or cover the HELOC.

4. It makes no mention of the fact the HELOC cannot be cancelled, suspended, or reduced in value, adds new equity DAILY by whatever the mortgage rate.

5. Has no finite window for equity use (in fact) is contractually guaranteed by Deed of Trust for 150 years from the Youngest Borrowers birth.

6. Mentions that “Reverse mortgages are very expensive” without pointing out the fact the additional expense is from the program providing the Borrower the benefit of a DOUBLE FIRST MORTGAGE, AND a little over HALF of the cost is the FHA insurance premium. It is disingenuous to say a loan program is expensive without acknowledging the protections provided by this additional “expense”. (without this “expense”? NONE of the afore-numbered benefits could exist.

7. NON-RECOURSE. The most OBVIOUS benefit of a HECM reverse is that from 62 on, NO MORTGAGE PAYMENTS are required. Why that wasn’t mentioned in the text is simply BEYOND me (given) the amount of time dedicated to portfolio management and taxation.

Does the RICP course discern differences between the fixed and adjustable rate HECM HELOC? No. Does it distinguish WHY the fixed rate plan is a poor choice for virtually any Client? No. It allows YOU to muddle through that on your own. Does it cover “arbitrage” techniques to eliminate mortgage debt in a fraction of the time needed by the conventional loan? No. Does it mention the Medicaid uses in asset protection strategies? No. Does the RICP course content offer a sample “Deed of Trust” for us to review? No. Does it mention that applying “forward lending” conventions to reverse lending creates an ungodly mess for both the Planner and the Borrower? No.
Does it mention anything about the concept of “cost-shifting” from income to inexhaustible equity) to free up retirement income? No. Does it mention using the HELOC equity to provide substitute income to delay social security benefits? REMARKABLY, YES, it DOES.

In all candor, I am eager to work through the remaining chapters to find out just what exactly does this course see as a practical use for Reverses? I will be eager to learn. Incredibly, the CFP folks are even LESS informed than the RICP’s.

There are a LOT more uses for this wonderful and federally insured plan for retirement. YOU just don’t know what those strategies are. And even though you paid $2,400-$2,700+ in tuition? You STILL don’t know any more about reverses than my Clients do.

Well, Folks, I’m studying the same materials YOU studied, and I will have the same credentials you have in the not-too-distant future. Having seen what you’ve studied? You have a LOT to learn. Here’s what Financial Planners don’t know about the reverse mortgage…(Apparently), EVERYTHING.

It’s not your fault. But staying in the dark IS your fault. You can only study what is provided in the curriculum. I’ve spoken to the College about these circumstances, and the great news is that (as we speak) Program Director Dr. Wade Pfau is making revisions/changes to accommodate these shortages. To his credit, he wasn’t aware of much of this either. It IS an ugly product smeared with 3 decades of lousy press and misinformation. Many Planners have made nonsensical statements like “Reverse Mortgages: They’re not for everybody”. Well, yeah. If you don’t own a home, and you’re under 62, and you have no ability to meet the debt to equity ratios? Then that is correct. It isn’t for you. But, in all honesty? Planners! If your Client turns 62? and they own a home (even with a mortgage on it so we can preserve the interest deduction) THIS should be the FIRST THING they do, and not the last! Time allows the HELOC to grow more equity.

I will help you with the same knowledge and skill-sets that you have; and help your Clients use their equity to solve real problems with late age, and cash flow, and capital…and never fear outliving their money while finding true meaning and purpose in the last best years of their lives, and beyond.

Call me. Let’s talk about helping your Clients live substantially better lives in retirement, with less stress and more freedom to make great choices. 808-464-5292
respectfully submitted for your review,

By Daniel J Turner NMLS#1016716

 

-For Financial Planners and Retiree’s living in Hawaii Kai, Kaneohe, Waikiki, Ewa Beach, Honolulu, Wapahu, Pearl City, Kailua, Mililani, Manoa, Hilo, Kapole’i, Waikoloa Village, Kailua-Kona, Kamuela, Honoka’a, Mountain View