In 1964, computer scientist Douglas Engelbart stumbled onto something he thought could make a difference in the way people interacted with computers. He named his invention the X-Y Position Indicator; today, we know it as the computer mouse. Engelbart went on to demonstrate his new device for leading computer experts like IBM and Hewlett Packard. He had no takers. Finally, Xerox’s Palo Alto Research Center (PARC) said yes, but even they failed to find a serious use for the device.
In late 1979, a 24-year-old entrepreneur, Steve Jobs, negotiated with Xerox to tour their PARC facility. As Jobs was being shown various technology, he spotted the X-Y Position Indicator and asked to see what it did. During the demonstration, he started jumping around the room, shouting, ‘Why aren’t you doing anything with this? This is the greatest thing. This is revolutionary!’”
The Xerox folks pressed Jobs to explain more of what he was seeing, but finally, he just said, “Never mind.” When Jobs left that day, he called a partner and told him that he found something that would change the world. Five years later, the X-Y Position Indicator was redesigned and incorporated into the Apple Macintosh as the world’s first “mouse.”
How did the world’s top computer scientists all miss it? Well, Xerox and the others had sight, but Steve Jobs had vision. Every week, I share with you a “demonstration” of the newly restructured HECM reverse mortgage. You may not reach Steve Jobs-level excitement, but with a bit of vision, you can see something that many others have missed.
Let me give you a real-life example.
“Ms. Keller, is there anything worse than being blind?” She replied,“Yes, having sight and no vision.”
When Vision Becomes Revenue Earned
Let’s focus on two advisors, both of whom represent the same products and carriers. They both visit the same sixty-two-year-old, married couple; one goes in the morning and the other in the afternoon. The clients identify themselves as having $300,000 in an investment account and $150,000 in cash, CDs and money markets. They are looking for better retirement outcomes without too much risk or exposure.
The first advisor meets with the clients and leaves with nothing.
The second advisor shares the same company and carrier stories, brochures and presentations, but she leaves with
- $50,000 to be added to the assets under management
- $100,000 policy for fixed income
- 1035 exchange for an old annuity
- Life insurance contract
Same clients, same products and presentations, but two very different results.
What was the difference? The variance was the second advisor had “Housing Wealth vision.” She had learned the questions, concepts, stories, and strategies to incorporate housing wealth into the dialogue, while the first advisor did not. Furthermore, she was able to accomplish what she did without using the proceeds of the reverse mortgage. She served her client in a way that was legally, ethically, morally, and responsibly as a fiduciary, as well as 100 percent compliant.
How Did She Accomplish It?
Client’s Home: $400,000 | Mortgage Balance: $60,000 | Monthly Payment: $550
The client obtained a HECM that provided $160,000 in benefit. This paid off the $60,000 mortgage and freed up $550 in monthly payments for the next fifteen years. Additionally, the HECM provided a $100,000 reserve that grew at 5 percent.
- The client’s liquidity concern is met with the use of the $100,000 growing line of credit.
- Now they can reposition the $150,000 they held in cash/CD/Money Market into vehicles that have better yields: $50,000 into assets under management and $100,000 into a fixed income product.
- The $550 of liberated mortgage payment dollars can now be used as premium replacement dollars for a life insurance policy with a long-term care rider.
- The investment account remains preserved from premature erosion (and even strengthened).
You see the difference? Housing wealth is an integrative, knowledge-based strategy designed to change retirement outcomes. The advisor who incorporates this will find sufficient opportunity to preserve assets and generate additional revenue in ways that are legal, ethical, moral, and compliant without ever having to use the direct proceeds of the HECM to accomplish it.
You may have just had your “Steve Jobs moment!”