Podcast E641: Advisors’ experience shapes RM recommendations


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How and advisor’s experience shapes reverse mortgage recommendations

Many financial professionals are very reluctant to discuss home equity recommendations with their clients. Guess which group is more likely to broach the subject?

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1 comment

James E. Veale, CPA, MBT October 28, 2020 at 2:15 am

In his 10/22/2020 RMD article, Chris writes: “Sending the survey out to thousands of financial planners, the organizers of the survey received over 500 responses….” In quoting the head of the Academy, Chris writes: “’Of those results, we got about 350 that were completely comprehensive. Every question [was] answered….'”

Nothing more was stated in the article about the survey process showing that the survey results are statistically valid. Such a low response rate generally means that the results are not reliable and most likely biased.

At the start of the article Chris claims: “The Academy for Home Equity in Financial Planning at the University of Illinois Urbana-Champaign (UIUC) recently conducted a survey of financial planners….” Yet the head of the Academy is quoted as saying: “‘The very first thing we measured is [the professions of respondents]: insurance agent, broker dealer, etc….'” What was the Academy measuring? Further, an insurance agent is an individual salesperson while a broker dealer is a firm normally including securities registrants and many times insurance salespeople. That is like comparing an atom to a molecule; it is odd at best.

The only thing that can be said about the survey is that the results represent anecdotal data which lacked sufficient controls and responses to be considered statistically valid. The survey results while interesting are not meaningful but may indicate some unreliable trend information.

What hampers surveys like this from achieving statistical validity are 1) the incredible amount of work needed to achieve that level of confidence and 2) their high costs. Unfortunately the information in the article will be treated as having achieved a superior level of reliability even though it has not.

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