First Boomers were the children of retirees. Now they’re the ones becoming eligible for a reverse mortgage. Which means in the not too distant future, when HECM professionals meet with a family to discuss the viability of a reverse mortgage for the seniors in the room, the “kids” are going to be Millennials.
Are you ready?
By 2020, the Millennials, aka Generation Y, will represent almost 50 percent of the global workforce. By 2025, that number will reach 75 percent. As such, Gen Y will make up an increasingly larger portion of HECM audiences — and professionals in every senior-centric field will need to be prepared to deal with them if their parents are potential clients.
So, what does what has been dubbed “the next Greatest Generation” want out of work and life? The results of this detailed survey are based on the responses of 7,800 Millennials across 29 countries. One of the biggest changes from past generations seems to be how they view work: 38 percent would hire for long-term success based on personal traits such as integrity over “hard skills” such as sales and marketing or financial/economic expertise. Nearly half (47 percent) say the purpose of business is to “improve society/protect the environment.” While the first half of this statement might sound similar to the idealism of past youth, the environmental emphasis is definitely a third millennium focus. Yet slightly more than half (54 percent) are “optimistic about economic conditions” — and a perhaps astonishing 83 percent say, “Businesses have a positive impact.”
What these findings seem to suggest is that appealing to Millennials might indeed be akin to appealing to their grandparents: they have strong values, and faith in both society and business. They place more emphasis on the power of the individual to effect change than their elders may have — which could be as much a reflection of changing times and global connectivity as their age.
Although this report doesn’t focus on seniors, if reverse mortgage specialists who find themselves working with Millennials strategically discuss the benefits of a HECM for their senior loved ones’ well being, allowing them to age in place with dignity, this can create a bridge across generations where all involved may find common ground for the elders they serve.
3 Comments
Amara claims: “…strategically discuss the benefits of a HECM for their senior loved ones’ well being, allowing them to age in place with dignity, this can create a bridge….” What I do not disagree with is the sales tactic employed but rather the claim itself.
A HECM was not and is not designed to allow a senior to age in place. For example, a LESA is only designed to last for approximately the TALC based average life expectancy of the youngest borrower. Yet the TALC based life expectancy is outdated and does not take into consideration current health or the health outlook (including genes). If the effective inflation rate is greater than the 20% assumed to cover all ages for the period of amortization, the actual period of amortization on a fully funded LESA could be shorter than the life expectancy in the computation. Also if the 20% inflation factor is insufficient to offset actual inflation then that could mean on a partially funded LESA that the payouts will be insufficient to cover the theoretical shortfall after a few years.
The primary purpose of a HECM is to help seniors manage their cash flow throughout retirement, not create social programs of aging in place or meeting the financial needs of needs based seniors.
While a HECM could help seniors age in place, it may be only partially suited to meeting that need but perhaps that may be all the senior needs to reach that goal. On the other hand HECMs are becoming less and less of a financial product to meet the financial needs of needs based seniors.
While we hear that HECM sales are about education and not salesmanship, that myth is ending and we are beginning to see what is really needed is ethical and moral salesmanship. After all we are salespeople who are compensated based on closed transactions not fees which are based on hours of professional services performed. We must learn that we must act professional even though we are salespeople.
I think RMMyths made some very good points as to whether the current HECM will be sufficient to meet the long term needs of some borrowers. The buying culture in America seemed to change with each new generation and the availability of credit cards. Our grandparents paid cash for most purchases, and if you didn’t have the money you didn’t buy it. Today it is different, and many have very high debt that factors into whether home equity will be enough to meet all their needs.
As to being ethical in our dealings – All of the professionals I know who sell HECMS are very careful, considerate and always ethical. Nothing new here.
Dick,
My experience is not the same.
Three times I was invited by fellow HECM originators to participate in ventures which if not illegal, at least immoral if not unethical; two of the invitees were rather naive and the other was promoted by two vice presidents of a large lender. One involved a conversion of Florida apartments into condos where the principal increase in value came from the legal costs related to the conversions and a couple of appraisers who were committed to “high side of the range” valuations. The other two were insurance schemes in California where such participation would have been illegal. Fortunately, I brought the transactions to our legal department before communicating with prospects and our legal department shot them all down.
While one of those “opportunities” came to me before HERA, the other two were presented after HERA but before the NMLS had been in operation for 12 months.
Also before HERA, I met a few dozen originators who would have never have met the minimum requirements of the criminal background check of NMLS licensing. Several of these originators were among the most productive HECM originators I have ever met. Thank goodness for NMLS licensing.
We have and have had our bad apples but it seems as if the number has diminished much faster than the loss trend in HECM endorsements. Although I never expect the industry to be free of legal, ethical, or moral problems, it seems such problems are being nipped in the bud today and acted upon in a rapid manner.