Broaching the Housing Wealth Conversation: The Five Most Important Questions Advisors Can Ask Their Clients

Last week I was introduced to a financial advisor who said one of his (potential) clients had a bad reaction with regards to the reverse mortgage. As I asked the advisor a few more questions, I realized he had made a few critical missteps which could be easily corrected.

  1. He wasn’t updated on the positive changes that the newly restructured Home Equity Conversion Mortgage has undergone.
  2. He used the words “reverse mortgage” vs. the newer, preferred language of HECM or Housing Wealth.
  3. He started with the solution before first exploring the problem and pain points.
  4. He didn’t frame Housing Wealth as an integrative retirement income planning strategy to be incorporated with their other assets and financial goals.

Most advisors are aware that there are numerous misconceptions surrounding reverse mortgages, therefore the advisor must be very strategic in broaching the subject with clients as there has been no software developed for mind-reading.

The good news is all four of those missteps are easily fixable. You can address issues 1 and 2 by viewing my Housing Wealth overview course filmed at the American College. You can find at 

The 4th issue can be further explore by completing the Housing Wealth Certified Advisor course or even reading my book.

However the 3rd issue–exploring the clients’ pain points and concerns–we will cover in the article.  So let me answer the question: “Don, how do I start a ‘Reverse Mortgage’ conversation without it going sideways in the first five minutes?” Let’s explore together.

It’s no secret that retirement today will last longer than that of past generations, and it’s essential that a client’s retirement income lasts just as long. The key is to begin with conversations that (1) reveal client expectations, (2) make the clients aware of their own goals and priorities, and (3) help them come to terms with making necessary adjustments to ensure a great retirement.

Most skilled advisors already use an initial consultation/annual review questionnaire. Recently, I’ve discovered the immense value incorporating the following questions into the questionnaire and even tailoring them for each specific client.

I developed a strategic core framework to simplify my questions and discover what clients truly want. I call it the 5 L’s:
Longevity (Lo) | Lifestyle (Lf) | Liquidity (Lq) | Legacy (Lg) | Long Term Care (Lt)

They are simple to understand and extremely powerful when combined with laser-focused questions.

The Five Core Concerns

Let’s examine each of the Five Core Client Concerns and the subsequent questions that arise.

1. Longevity Concern: Will I have enough savings to meet my basic living expenses?

This goal focuses on the lifetime survival of clients’ savings to meet essential living requirements, e.g., housing expenses. According to a 2016 survey, the No. 1 concern of retirees is how not to run out of savings.

Clearly, there are many things that can erode a nest egg, including market fluctuation, sequence risks, inflation, excessive withdrawals, and unexpected expenses. The bottom line remains: running out of money and not being a burden on family is still at the forefront of every retiree’s mind. Try asking your clients the following question: On a scale of 1 to 10, how much does the thought of running out of savings in retirement trouble you?

2. Lifestyle Concern: Will I have enough money to enjoy retirement on my terms?

It’s one thing to have enough savings to meet your basic needs, but it’s another to maintain your desired overall standard of living and not be forced to make moderate to drastic lifestyle changes. These lifestyle components tend to be more discretionary in nature and may include things like travel and leisure, self-improvement activities, social engagements, and helping a family member.

My friend, Dr. Wade Pfau, suggests that maximizing spending power is the key to meeting this concern. That way, spending can remain consistent and sustainable, while allowing for an acceptable degree of risk. Furthermore, clients must keep in mind that these expenses may need to be scaled back at certain points in retirement.

Regardless of the components, lifestyle goals can be revealing when it comes to your clients’ retirement expectations. Try asking your clients the following question: On a scale of 1 to 10, how disappointed would you be if you had to adjust your standard of living to make your savings last?

Click Here to Download Related Article: Making a Case for Reverse Mortgages in Retirement Income Conversations

3. Legacy Concern: How will I be financially remembered?

How will you be financially remembered? This is my definition of Legacy. Traditionally, legacy goals relate to leaving assets for subsequent generations, or to charities. However, I believe it includes significantly more.

It could be that your clients don’t have to borrow money from their children, move into their son’s spare bedroom, or ask their daughter to quit working to care for them. Try asking your clients the following question: On a scale of 1 to 10, how important is it for you to cut back on your retirement lifestyle if it meant leaving more legacy for your heirs?

4. Liquidity Concern: Will I have access to tax-advantaged money when I need it?

Maintaining additional assets for unexpected contingencies is critical in retirement.  The “what ifs” of retirement are endless and having access to a reserve for the inevitable is essential. They include the run-of-the-mill spending shocks for emergencies, illnesses, expenses, or just some enjoyment that will require extra money.  Ideally, these reserves should be accessible with as little taxable or opportunity-loss impact as possible and without taking away from income that could be needed in the future.

These types of Liquidity concerns most often affect those on a fixed income that covers their essentials.  An example could be a teacher or retired auto worker who gets a pension, or a person who is collecting an annuity they purchased. They have income, but they may not have true liquidity. Try asking your clients: On a scale of 1 to 10, how prepared are you to handle a financial emergency or unexpected expense?

5. Long Term Care Concern: Am I financially prepared for the costs of health related expenses?

A 65-year old couple retiring this year (2018) will need an estimated $275,000 to cover out of pocket health care costs in retirement, according to a recent Fidelity study. This estimate applies to those with traditional Medicare insurance coverage and considers premiums, co-payments, deductibles, and out-of-pocket drug costs. It does not consider the cost of a nursing home or long-term care clients may need; that alone is estimated to be an additional $130,000. I have found this expense to be the one that most folks ignore almost completely.

Try asking your clients the following question: On a scale of 1 to 10, how prepared would you be if you had to access an additional $300,000 for health care related costs? How much does this concern you?

My Favorite Example:

You’re meeting with a 65-year-old couple. They have $500,000 in savings, a $400,000 home, and a $155,000 mortgage with payments of $1,250 a month. Although you could ask the aforementioned questions verbatim, you could also employ a little creativity to get their Longevity, Lifestyle, Liquidity, Legacy, and Long Term Care concerns out in the open.

Sample Question: What would retirement be like if you didn’t have to make a monthly mortgage payment?

Their answer will be the conversational launching point for cycling through the Five Core Client Concerns.  But remember, the fruit is in the follow-up questions.

If a client says, “It would be great not to have to make that monthly payment,” you could then ask, “Why or in what regard would it be great?” And from there they will tell you about having more money to spend (Lf), or not having to draw out as much from savings (Lo), or being able to save that money for a rainy day (Lq/Lt), or using those dollars to help their grandchildren save for college or private middle school (Lg).

You have helped your clients gain awareness of their goals and hone in on their expectations. You can now work with them to make the appropriate adjustments to help them achieve the retirement they want.

Five Core Client Concern Questions:

Don Graves, RICP®, CLTC®, Certified Senior Advisor, CSA®
Don Graves, RICP® is a Retirement Income Certified Professional and one of the Nation’s Leading Educators on the Emerging Role of Reverse Mortgages in Retirement Income Planning. He is president and founder of the HECM Institute for Housing Wealth Studies and an adjunct professor of Retirement Income at The American College of Financial Services. He has helped tens of thousands of Advisors as well as more than 3,000 personal clients since the year 2000
Don Graves, RICP®, CLTC®, Certified Senior Advisor, CSA®
Don Graves, RICP®, CLTC®, Certified Senior Advisor, CSA®

Categories: Advisors, Financial


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