Fiduciary Planning and Housing Wealth: Not a Sales Pitch, Just the Right Thing

In our line of work, “fiduciary” fundamentally means doing right by the people who trust us. Whether you go by SEC rules, state laws, or the CFP^® Board, it boils down to using good judgment, being honest, and always putting the client first.

Now here’s the kicker: even with all that talk of doing what’s best for the client, most advisors are still ignoring one of the biggest pieces of the puzzle…the client’s home.

That isn’t just an oversight. For retirees especially, it could be a real missed opportunity. And some would suggest, for advisors, a liability if you’re leaving it out.

Almost eight years ago, Ryan and I realized this gap and wanted to make a positive impact for the planning professionals. We are here to tell the truth. The clients’ housing wealth should be part of the planning conversation and all options evaluated across the broad plan. We have made it our responsibility to help advisors, and their clients make fully informed decisions with all their assets.  Does it belong in every plan?  Of course not.  Does it belong in more than are currently being considered?  Absolutely.

Why the Home Still Matters

Folks over 62 in America are sitting on over $14 trillion in home equity. That’s trillion with a T. Here’s what that looks like as a number: $14,000,000,000,000.  That’s a lot of unrealized opportunity!  For many, the house is their biggest asset and probably their most emotional one too.

But despite that, more than 70% of advisors say they rarely or never bring up housing wealth in their planning (FPA, 2021). That’s like a doctor ignoring a major organ during a checkup because they were not trained to look at it and its role/function to the body’s overall health.

To be fair, the major planning software like eMoney, Income Lab, MoneyGuide, RightCapital, and Holistiplan have yet to make it easy to factor in housing options. All of the planning industry thought leaders are encouraging it. So, if the analysis of different options for clients’ homes produces different results…solutions for challenges and increased range of outcomes, why would a fiduciary advisor steer clear?

What Fiduciary Duty Actually Means

Let’s get practical. Fiduciary duty isn’t a fancy title, it comes with real expectations. Here's how we see it:

1. Duty of Care

You’re expected to look at the whole picture: investments, income, taxes, risks, and yes, the house. If the equity in that home could help with retirement income, longevity planning, or taxes, you’ve got to at least look at it.

2. Duty of Loyalty

Fiduciaries put the client ahead of themselves, which includes staying clear of any “recommendation” that benefits the advisor more than the client. That’s why a product-neutral stance on housing wealth matters. You’re not pushing a loan; you’re helping them understand their options with the trade-offs and benefits of each.

3. Duty of Objectivity

Good advice is complete advice. If there’s an asset that could change the outcome of the plan, and you skip over it, that’s not full or fair planning. And the home often fits right into that gap.

When It Makes Sense to Use Housing Wealth

I’m not saying that a retirement mortgage is the right tool for every situation. But for certain clients, it can make a real difference:

• Covering income needs during a down market without selling investments
• Providing tax-friendly money for long-term care or charitable giving
• Creating space to do Roth conversions before RMDs kick in
• Helping clients gift money to kids or grandkids while they’re still around to enjoy it
• Creating options when it’s time to move, downsize, upsize, or buy a retirement home

All of these can be modeled without ever pitching a product. Just show the options, run the numbers, and let the client choose with eyes wide open.

Not Bringing It Up? That’s a Risk, Too

Some advisors think that avoiding home equity asset in the plan is being “safe.” But skipping it entirely might result in a bigger risk.

If the client’s house makes up 5%, 20%, 60% or ?% of their net worth, and you don’t even talk about it, how complete is that plan? It’s difficult to conclude that it’s in the best interest of the client to avoid bringing it into the conversation.

As Michael Kitces says, “fiduciary care is not just about investments, it’s about the whole client.” That includes real estate.

We’re Not Lenders. We’re Planning Partners.

At Equity Wealth Strategies, we don’t sell loans. We don’t get a commission. And we don’t care if the answer ends up being “do nothing.”  We are truly agnostic as to what should happen with your client’s home until the math, emotion, legacy plan, etc., drive you and the client to the best outcome for their plan.

We believe that when housing wealth matters, it should be part of the plan. We’re here to help advisors run scenarios, look at options, and build client trust by including everything in the analysis.

Final Thought

Tech is getting better. Projections are getting cheaper. But your wisdom matters.

Helping clients see the full picture, including what their home can do for them, isn’t extra. It’s the fiduciary role.  Your clients work with your because they trust you. They trust that you are making an effort to be informed on all things that could impact their outcomes.  They trust that you will tell them the truth.  Sadly, in our early conversations with thousands of advisors, very few of them knew the truth.    

It’s not a niche idea. It’s a professional obligation.

• HJS

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