Jamie Hopkins: Why debt is ‘mighty’, rents are ‘underutilized’ and the 4% rule is just a ‘conclusion’

Here is a clear message to financial advisors from Jamie Hopkins, Managing Partner of Wealth Management Solutions at Carson Group:

“If you don’t really care about what you’re doing, you’re doing the wrong business,” he told ThinkAdvisor in an interview. “Define your ‘Why.’ Your ‘Why’ should make you cry.

In his latest book,Find Your Freedom: Financial Planning for a Customized Life(Harriman House – November 22, 2022), co-authored with Ron Carson, Founder and CEO of Carson Group, readers are of course free to jump among the 26 chapters. But chances are they’ll want to take this comprehensive, conversational tome from cover to cover.

It provides a wealth of information on financial planning as well as the likely repercussions of not having a good financial plan.

In the interview, however, Hopkins argues that there’s usually no need for an all-inclusive plan if, say, you’re only in your 20s. Estate planning can come later.

A professor of practical finance at Creighton University’s Heider College of Business, Hopkins co-created the Retirement Income Certified Professional designation and developed additional educational materials for the Certified Financial Planner and Chartered Financial Consultant programs at the American College of Financial Services, among others.

In 2017, seven years after Hopkins earned a JD from Villanova School of Law, the American Bar Association named him one of Top 40 Young Lawyers in the USA

During our conversation, he explores a number of financial planning concepts, including using debt as a powerful tool. He also explains why he thinks annuities are “oversold and underutilized” and why the 4% rule is not a rule but “a drawdown finding.”

ThinkAdvisor recently had a phone interview with Hopkins, who was candid in a brief assessment of financial advisors.

He would only hire “5% of financial advisers,” he says, then gives reasons.

Here are the highlights of our interview:

THINKADVIVSOR: How do you define “financial freedom”?

JAMIE HOPKINS: People have to define that for themselves. You have to start by understanding your relationship with money, where you want to go with and who you want to be. Then work backwards towards what financial freedom means to you.

How can advisors take their own personal financial freedom to the next level?

Define your “Why”. I always say, “Your ‘Why’ should make you cry.” If you don’t really care about what you do, you’re in the wrong job, whatever you do for a living.

I think most advisors should put their “Why” on their website. Make a video about your “Why”.

Figure out what you really want to do as an advisor. Make sure you only focus on the things you want to do, whether that’s partnering up, finding the right tech tools, or leaving the company you work with and going out on your own or joining someone’s company. another.

You don’t have to feel stuck in the default life.

What is the Carson “Find Your Planning Freedom” Promise?

It’s following a proven financial planning process that will get you where you want to go.

Advisors need to help people understand the basics first – savings, income [and so on] – and then become more strategic about the decisions they ultimately have to make, such as layering legacy and more complex planning topics.

What stops people from wanting to do a financial analysis? to plan?

Everyone has parts of a financial plan. You might not put it all together [now] – and that’s okay. Not everything has to be closed [at once].

You may be in a part of life where only elements of a plan are in place because that’s what you need at the time. [particular] phase.

If you’re 26, for example, you don’t need to know what your inheritance, estate planning, and charity [strategies] are still.

But you need to align your planning with your goals and objectives. No plan is right for everyone.

How involved are Millennials and Gen Z in financial planning?

It all depends on what stage of life you are in and where you are at that stage, not your age.

The oldest millennials are in their forties. They might even think of retirement strategies. Some millennials in their twenties are millionaires.

However, most young people think about housing, managing their debts and understanding their relationship with money.

[The last point] is an integral part of what [advisors] used to jump over: The behavioral aspect of understanding your relationship with money is incredibly recent. It has only been two years since this was added to the CFP training.

And one thing we need to understand better is whether you are a debt-averse person or a more risk-tolerant person.

How “can debt be a powerful planning tool that helps us open up possibilities in life that you wouldn’t expect without it,” as you write?

Take a lesson from the best companies in the world: they almost all leverage debt to grow. Debt is a very powerful vector of growth.

So you should always watch what [rates] you can borrow and what you can exploit elsewhere. This should be an annual decision.

For Americans, the two most important debt decisions are going to college and buying a home. Additionally, you may have a debt that comes from your business.

Whenever you borrow, you also decide how much to borrow versus how much to invest.

Even if you have paid off your mortgage and are 62 years old, you decide each year whether, for example, you have to pay all taxes [with cash]refinance your mortgage or do a reverse mortgage.

Insurance is very important for a financial plan, you write: “Being without insurance is like having a steering wheel but no car.” But why do you need insurance if you are investing in the market?

Insurance is often a technique for mitigating or transferring risk. Tax-free death benefits from life insurance can be a more efficient way to transfer wealth.

There are some things market returns can’t solve. For example, no returns can [provide] lifetime income.


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John A. Bogar