Ep 043

Redefining Retirement, The Convenience Economy, & Staying Relevant in a Digital World

With

Jamie Hopkins

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Inside This Episode

Today, I’m talking with Jamie Hopkins, the Director of Private Wealth Management at Bryn Mawr Trust and a leading voice in the retirement income planning space.

As the co-creator of the RICP designation, Jamie helped reshape how retirement income planning was being taught – filling a much needed gap in our industry and resulting in a complete shift in how advisors help clients secure their financial futures.

In this episode, Jamie shares his motivations for getting into financial services and a ton of advice for advisors who want to build a winning practice that stays relevant in a fast-paced digital world.

3 of the biggest insights from Jamie Hopkins

  • #1 The story of how Jamie co-created the RICP program, which more than 20k advisors have gone through. This certification redefined retirement income planning for financial services and has led to better retirement advice for millions of Americans.

  • #2 Are you really offering comprehensive planning? Jamie explains many advisors don’t, but claim they do. He then shares advice for how you can limit your scope of services without losing your clients to competitors who offer holistic planning. 

  • #3 As AI and technology continue to sweep the financial advisory space, Jamie shares ways advisors can prepare their practice to thrive in the future.

KEY TAKEAWAYS: 

  • Who is Jamie Hopkins?
  • The birth of the RICP designation
  • The Mt. Rushmore of retirement income
  • Mistakes Advisors used to make about retirement planning
  • Pre- and post-ERISA planning
  • Guaranteed income products
  • Fiduciaries and insurance products
  • Benefits and pitfalls of referral networks
  • Should FIAs be in your toolbox?
  • The challenge of comparing annuity products
  • How advisors can stay relevant in the future
  • Fish farms, business, and life

DO YOU REALLY OFFER COMPREHENSIVE FINANCIAL PLANNING?

SELECTED LINKS FROM THE EPISODE: 

PEOPLE MENTIONED IN THE EPISODE:

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MIC DROP MOMENTS WITH JAMIE HOPKINS

  • Firms with clean data that use technology will replace the firms that don’t.” – Jamie Hopkins

  • If you can be the shop that makes it more convenient for your client, you are going to win more often than not long-term.” – Jamie Hopkins

  • “It’s perfectly fine and very normal as a fiduciary to limit your scope of services based on your expertise.” – Jamie Hopkins

  • “Advisors need to broaden their services long-term to stay relevant.” – Jamie Hopkins

  • “The world is bringing more services to the firms that are on the leading edge. And if you don’t keep up with that, clients are going to find a different home.” – Jamie Hopkins

Brad Johnson: Welcome to another episode of Do Business Do Life. Excited. We’ve got Jamie Hopkins here with us today. Welcome, Jamie.

Jamie Hopkins: Hey, thanks for having me on, Brad. Good to see you.

Brad Johnson: Yeah. Hey, I love that you just made this happen. You’re like New York City hotel room experience but, hey, that’s the beauty of technology and podcasting today. So, thanks for carving out the time while you’re on the road.

Jamie Hopkins: Absolutely. And I’ve been pretty used to it over the years but I haven’t been, since I’ve paused my own podcast right now, I haven’t been traveling with all my podcast gear. So, when you are bringing me on, it’s jerry-rigged things, building a stand. I got the ironing board propped up so I can get the phone up high enough. It’s just the world, right? You figure out how to do things.

Brad Johnson: Well, I love the commitment so thanks for making that happen. Well, I know obviously you’re no stranger to the world of finance. Probably many listening in today have consumed some of your content. I follow a lot of the stuff you put out on LinkedIn. I know obviously you spent a lot of time with Carson coaching independent financial advisors all across the country. But for those that aren’t familiar, maybe just a brief version of this, like your journey into finance, your stops along the way, and kind of what shaped you to get to where you are today.

Jamie Hopkins: Yeah. Well, that can be like five hours. I’ll try to boil it down a little bit here today. You know, I think I’ll start this way today. So, my journey starts with a very early experience and my early experience is my dad passing away. He passed away when I was eight years old. And you’ve seen me talk about this before but I’ve got four younger sisters. Neither of my parents graduated college and my dad passed away. And then my mom, we’re running a construction company together and he passed away on a job site. And my mom had to keep caring four kids and built, you know, she eventually just kept running that company and she still runs it today. And she’s in her late 60s still running a construction company, a woman, which is pretty rare. But a lot of that built this kind of inside of me, a scarcity mindset around money. And I didn’t know it at the time, right? Like, eight years old, you’re not thinking about how this is going to shape your future careers but later on in life, when I was clerking in the appellate division, I went to law school business school, ended up in the appellate division and worked on one of Bernie Madoff’s cases.

And what I saw there was like the opposite of what you’d want to see for somebody like my mom. Right? Like, you saw this abuse of the financial system, the abuse of trust, and a lack of really true transparency and a lot has changed for the better since then. But I kind of watched this opposite side and it really got me thinking like, “Well, where do people like my mom go for advice?” The reality is a lot of people like my mom don’t get advice still today, right? I mean, non-college-educated construction workers don’t get advice. But then it sent me down this whole path of kind of trying to better understand their situation. And how do we democratize advice? How do we make retirement more secure for people like my mom? How do we make sure that when we have families like where my mom and dad were, that like they have some level of advice that they have insurance for somebody that’s doing kind of like that type of work and kind of the breadwinner for a family? And that eventually sent me into this industry. I ran my own estate planning firm for a small period of time. I own a consulting firm. I spent seven years at American College building up programs, then about five years-ish at Carson, and now over at Bryn Mawr Trust. And my journey has mostly been about building different things that I think helps Americans have more secure financial futures. And that’s really what my journey has been about so far.

Brad Johnson: Well, it’s so interesting on this show. I also did not come from, you know, I was not the silver spoon kid and it’s interesting how so often in finance that kind of starts this journey of like almost from lack of and seeking to understand how can I change my own future and journey when it comes to finances. So, let’s go back to American College for Financial Services. Not only were you teaching but you’re also helping build programs like the RICP, different designations, things like that. So, if we kind of pull out a few of those highlights, what were some of your learnings along this journey in finance of like, “Wow, this is kind of broken and I want to help fix it?”

Jamie Hopkins: Yeah. So, going back to that journey, I’m a big proponent of education and lifelong learning. And the American College played a really important part in our profession. Dr. Solomon Huebner, who launched the American College way back in the day, wanted to professionalize really insurance at that point, if we’re being honest, but financial services. And they started out by teaching at the time who was the trusted professional was the insurance agent. And so, they built CLU and started training people. Now, I come in 90 years after this, right? But one of the things that was hitting the market, you go back to right after kind of 2010, I think it was ’11 and ’12 when we kind of started working on this was that Americans were starting to retire in large numbers and everybody had ads, “Hey, come to your retirement planning with us.” But there really wasn’t an education program that dealt with it. It feels like it existed now. Like, when I talk to people in today, people are like, “Oh, yeah. Well, we were doing that.” CFP didn’t add retirement income planning to like 2015 or 2016 like it actually didn’t exist. We act like it did but even CFP didn’t teach it. CLU didn’t teach it. None of the programs were teaching income planning.

And so, we just saw this need in the market for it. And so, we built out, we created and built the content and launched RICP. And what was super fun about that though, was like a highlight for me is it wasn’t just teaching. Like, we built all the curriculum. We built the network of people who like came together ultimately to provide that knowledge. We started doing original research. We built out a retirement income research center that’s still up and operating. And then we had to learn how to market and sell it. Like, I remember David Littell and I actually like sitting in the office designing pamphlets, right? Because it was like a game of three in this organization. The nice part was we kind of separated ourselves out so we could build it like we wanted to but then the flip side was like marketing and messaging and PR. We kind of did ourselves, which was really fun because essentially, like we launched our own company inside of a company but that’s what we did including fundraising and our P&L and hiring people, and it was a blast. And that was a really big highlight. And it took off. I mean, in the six years after we launched it, I think we had 18,000 financial advisors went through or signed up for the RICP in that six-year period.

Brad Johnson: Wow.

Jamie Hopkins: Yeah. When you look at that, I mean, that was the most used financial advisor education program in the country during that six-year period, more so than CFP, more so than CLU. Anything else, that was number one. And it was the fastest program in the history of the college, too, and basically a 100-year firm of adoption. So, we hit the market at the right time I think with a great product and a great staff. Wade Pfau came in later on as part of it and headed up for a couple of years after I left the college. But it’s been impressive. And when you think about that, I think there’s mid-20 some thousand RICPs now that have gotten that education. And then you think about 100, 200, 300 clients apiece, you’ve really impacted a tremendous amount of Americans, right? I mean, just tremendous amount. I mean, millions of Americans now are getting advice that is better around retirement income planning than it was two decades ago.

Brad Johnson: And good timing. I mean, you look at the country’s demographic, the baby boomer, the aging baby boomer population. So, obviously, it’s a huge need out there. My journey in finances kind of followed that age demographic. So, you went back to really looking at an education and research-based approach to retirement income. Two questions for you. If you were to pick during that time period kind of your Mount Rushmore of experts that would be on retirement income, who would that be? And then secondarily, what were some of the big findings of like, “Wow, when it comes to retirement income like people have this wrong or this is like a pillar that should happen every single time?” What are your thoughts there?

Jamie Hopkins: Yeah. Well, let’s start with the Mount Rushmore people. And so, luckily, Mount Rushmore doesn’t have just one person, so I’m allowed to state and use multiple people. I will say Wade was tremendously important for me. I view him as a great friend and really great researcher in our space. So, I definitely put Wade Pfau up there. I will tell you, while it didn’t happen so much while I was going through the program but I think Christine Benz does one of the best jobs at Morningstar of actually taking a lot of the retirement income material out there and making it really relatable to people. I would definitely say, look, at the time Michael Kitces was up there. Like, he just, you know, if there was a guy that he had to touch every topic out there in the world, it was him. Interestingly enough, it’s probably less so today, I think. You know, Jeff Levine is a good friend of mine. He’s probably moved up there. Denise Appleby’s actually really sharp. And then I would also have Natalie Choate on there, who is probably the single most intellectual person about distribution roles that I knew.

So, when I looked at my technical skill set around retirement distributions like her books and her work was phenomenal. But there’s a lot of people so the interesting thing about it, even retirement income planning, it’s not a giant field of experts. It’s actually a pretty small group. And then the people who are really good at it still kind of own an area like that one, like Natalie Choate is really good at retirement plan distributions. But if you went to her and talked to her about like sequence risk modeling, it’s not her strong suit. But if you went to Wade about sequence modeling, super strong there. But if you asked Wade about IRA distribution rules like he usually says that he’s like, “I’m not as good at that. Like, I don’t study the laws and the rules. I study the modeling and that side.” But those, to me, some of the best people are really influential out there in this space. Yeah. I’ll pause there. That’s a great group of people. I’m trying to think if I’m missing anybody that is super important that I just totally blanked on but I think that’s the right group.

Brad Johnson: I love it. I’m familiar. It’s interesting. I’m familiar with only about half of those names, so I’m going to have to dive in. That’s why I asked the question. Okay. So, let’s go to before you started this six-year journey, what were the surprising like, “Wow, there’s a lot of financial advisors out there getting this wrong when it comes to retirement income,” and I just look at like the mythical 4% rule so maybe I don’t know if we start with that or not? And then what are some pillars, like regardless of client scenario they’re all going to be a little different but these are like kind of some staples when it comes to retirement income planning?

Jamie Hopkins: Yeah. Let me throw out a couple that I just saw people get wrong pretty consistently early on. One of them was any understanding about home equity. And I will tell you, that was the one set, and we did a quiz on this. I don’t remember the scores but we published it in the Journal of Financial Planning and I think it was about 50% was the average score. It was like a ten-question quiz, although slightly less than 50%. It must’ve been like 48% or something because I had a joke about it, which was like if you had a room full of monkeys and they randomly guessed, they would actually outperform advisors, right? So, advisors were scoring in like the high 40s on this housing quiz. And that was a lot about reverse mortgages, how to use housing in retirement. And more or less what we found out was advisors struggle in that world from the exact same misinformation that consumers struggle from, that actually there was no like knowledge that advisors had really amassed for retirement income planning and housing that consumers didn’t have. So, it was actually really disappointing.

And then I ended up penning a bunch of articles about how that’s a big problem, that we didn’t understand it. And basic things that I would say about products like reverse mortgages that you don’t lose the house and title of the home. And advisors just got that wrong and wrong and wrong and wrong and wrong and wrong. Yeah. And so, we put a lot of education into that side of the world. The other one, when you talk about the 4% finding the rule, I always bang on the drum about it’s not a rule, it’s a finding. You know, rules are things that are true, right? Like, it’s a rule that do X, Y, or Z. The reality is that’s a super limited finding based on historical data. Like, that’s like saying September is usually a bad month in the market. That’s not a rule, right? Like on average, it’s the worst month. That’s not a rule that next year it’s going to be the worst month. And so, like even just the way that we talk about it in the industry as a rule to me is wrong and it’s kind of implied that we should follow that. And it’s not super helpful to follow. But even just understanding the details of what that really meant and it wasn’t supposed to be a distribution mechanism, it was just showing that average returns are different than kind of in retirement once you’re taking distributions. And that’s like all it really was supposed to show was that like you can average 8% but doesn’t mean you can spend 8%.

Brad Johnson: Right, Right.

Jamie Hopkins: And we’ve kind of taken that to a whole different world. And it’s had benefits. Like, I actually think the conversation around it is really good. The adherence to it from the marketplace for maybe 8 to 10 years was bad. The importance of delaying Social Security and the importance of having some lifetime income in a retirement income plan were also two things that people got really wrong back then. The good news about Social Security is that message kind of caught on over the last 13 years and like actually that has gotten better. It’s not that there’s zero pushback on it, but generally speaking, American advisors have kind of en masse said, “Look, I know it’s better to delay Social Security.” Whether they all think it works in their situation, different issue, but in general, there’s been some more consensus on that one over the years. Once you start interviewing retirement income experts, what you do find out is almost all of them believe in some source of guaranteed income inside of a retirement income plan.

And that’s to me, just really interesting when you start going through the ones that are close to retirement, almost all of them have purchased some type of guaranteed income source, you know, mostly being annuities. But if you have enough of a pension and things like that, you might not need to go buy an additional one because essentially you did buy it, right? Like, you put that money aside to buy an annuity throughout your working career. It’s just a different way to approach it.

Brad Johnson: Yes. So, on that note, that was one of the things I remember as I was young in this space. ERISA, basically, and for those maybe unfamiliar, I’m sure you’re very familiar, you might explain in high level what that is but, basically, if you look at the corporations in America that had pensions, a vast majority of them pre-ERISA, and it freed them up from that responsibility to where it became more of a do it yourself 401(k) system that did not have the guaranteed income. So, how did you see that shift in the retirement income market like if you look back to the history of the US? I’d love to hear your take on that.

Jamie Hopkins: Yeah. So, that is super interesting. And so, you had ERISA come out 1974 and kind of 401(k)s weren’t in it yet and IRAs really weren’t in it yet either so they came shortly thereafter. But it kind of set forth this system of protecting American’s retirement assets. That was actually like, if you think about the ERISA, what it was really there for. And one of the interesting things that we take for granted today, which was a pre-ERISA question was like you go work for XYZ Company, they say, “Hey, Brad, we’re going to save for your retirement ” and that company goes out of business. So, what happens to those retirement savings? You know, it was really murky. Were those assets for creditors? Could the company use them? Did they really owe them to people because it’s kind of a promised future benefit that maybe isn’t invested, isn’t matured? So, you didn’t pay taxes on it, so it’s not really yours yet. And so, there’s this whole debate.

And so, basically, the government at the federal level had to step in and say, “We’ve got to protect American retirees and we got to protect these promised benefits so that they sit inside pensions and 401(k)s that are protected. And if the company goes out of business, you don’t lose these assets. And most of the time when people talk about pension companies going out of business, they were ones pre-ERISA. But post-ERISA, those essentially became mostly protected, not entirely. There are high-income individuals, say, like pilots, where there have been some airlines have gone out of business where pilots’ benefits have been cut back, but they don’t go to zero. It’s just what the Pension Benefit Guaranty Corporation might cover, isn’t 100% of the shortfall, but typically you have to be fairly high net, like fairly high income-oriented for a long period of time where you’d see any benefit come back.

So, they kind of created this security system for retirement assets but inside of that, it eventually shifted the onus away from the employer and onto the employee. That’s actually the big shift that’s occurred even from picking investments, right? There was a long time where you didn’t have investment discretion inside of your accounts. Today, most retirement accounts 401(k)s do allow for participant investment discretion, pick their own investments. So, not only how to save, where to save, how much the save, what investments to pick, and most of the contributions now being yours versus an employer put the money in. You didn’t put money in. They picked the investments. They paid for it. That has shifted. There are actually still a lot of pensions out there. Oddly enough, I think since 2017, there’s been more defined benefit plan set up than 401(k) plans oddly enough. So, you actually still see these set up with more frequency than like news media would tell you but they tend to be smaller enterprises.

So, think like attorney groups, dentist groups. They tend to be professionals with high-income levels that will set up cash balance plans, which is a type of pension plan too because they can make much higher contributions than you could make in a 401(k), So, there’s still a use for them but it’s more from a savings and less from a retirement income strategy perspective today.

Brad Johnson: Cool. Thanks for running through that. I figured you would have a take on ERISA with your background. So, let’s jump because you leave American College. You go to Carson Wealth. It was cool like right as Triad was being born, I know we had some cool conversations around but I’m going to call, I think you call it convergence of services. I look at like with my background, I grew up in the insurance space and was fortunate enough to be in very early and what became the largest insurance broker in the US when it comes to fixed and indexed annuities. And so, I saw from this lens and then our distribution our advisors were like, “Wait. There are clients that need their assets managed too. They need life insurance as well.” And so, I saw it from the insurance side this convergence happening. At Carson, you would have kind of been very responsible for more of an RIA asset management. I know Ron left LPL, kind of the BD channel to go into the RIA space and you were coming at it from the other angle, which was incorporating insurance into more of an asset management platform.

What are your thoughts and, I guess, one other piece of context, like back to ERISA, now you’ve got this need where people don’t have pensions anymore. There is not this like kind of guaranteed fixed income sort of portion to most retiree’s portfolios. So, it’s obviously by trying to solve a problem, a lot of this convergence is happening. So, let’s just get your hot take. Like, what do you got on that one, Jamie?

Jamie Hopkins: Yeah. Well, what happened to this? I did remember something else. I always put this is how my brain works. But Richard Thaler, Dr. Richard Thaler would be another all-time great,

Brad Johnson: You’re adding him to your Mount Rushmore.

Jamie Hopkins: Yeah. He’s on the mountain.

Brad Johnson: You have a seven-person Mount Rushmore, just FYI.

Jamie Hopkins: Yeah. Well, look, there were plans to add another face, I think, to Mount Rushmore or spot, right, that was supposed to be filled out. So, Richard Thaler would have been the most excited I ever was to interview anybody in our space. He’s kind of one of the two godfathers of behavioral finance and retirement kind of coming together. So, moving off of that. Then I got to go work with Ron Carson and if you do an OG of advisory assets Mount Rushmore, Ron might stand there alone. So, it might be a single-person mountain for that one. You know, he’s up there. And I came into Carson at the time really to lead some of the thought leadership around retirement planning and then to start pulling these pieces together. So, Erin Wood, who is one of my counterparts over there, who I love, I think is phenomenal. We started thinking about all the different services we either offered or didn’t offer to the, you know, offered but not the level we wanted to offer yet or stuff we just didn’t even offer like P&C Insurance, any capabilities there, a really good insurance offering, 401(k), tax services. And so, we really set out a roadmap to bring as many of those services to the advisors at Carson as we possibly could. Trust services.

And for a large part, there are like we had to find good partners for these. We couldn’t build all these from the ground up. And like we had those conversations. Should Carson try to build its own insurance site? Should we go partner with somebody? And we did have all these debates. Some of them we built ourselves. Tax services, we’ve done ourselves, right? We hired people. We built the tech. We integrated the tech. We built it out. Insurance, we ultimately ended up partnering and the joint venture set up there and it’s gone well but we had the challenge of this kind of movement that occurred in financial services where you had the IDD space. They were tied together. Then you saw a big move out of the broker-dealer world to be more RIA. And they all kind of threw their hands up and were like, “I don’t know how to do insurance anymore. Once I left, they don’t have access to stuff. I’m done with it. I’m leaving, whatever.” And so, we actually had to re-integrate the mindset of where insurance fits once you leave a brokerage firm and like, how do you do this as just a regular advisor, right, doing planning for clients and income planning?

And so, we did a lot of education like how do products fit in in a non-sales world, but in a planning world and in an asset-driven world or a planning fee world. And it did take some time to get re-adoption of these products. And you know, to be fair enough, there were some that were burned by it that didn’t like certain products. You know, some things didn’t do great. So, Ron had talked about that before, too. I kind of had to re-educate him. I remember doing a whole like fee of presentation to him because he was like, “I hate annuities. I don’t want to use annuities here.” And I had to like sit him down and we had this whole thing. And he left it being like, “Wow. These things actually have a bunch of uses.” So, we launched kind of an insurance offering inside of Carson, Carson Insurance, and hired a couple of people. And that’s done really well and the adoption of that’s gone up. You know, interest rates going up and has been beneficial to kind of have access to those products. But it’s a different world, right? There are no sales quotas. A lot of times it’s outsourced so the advisors aren’t even really getting paid on it. So, we kind of had to retrain to the planning focus and then integrate that into our what we call the proven process there at Carson. So, how does it fit into working with the client holistically?

Ron and I wrote the book, Find Your Freedom, that came out last year, and it was a Wall Street Journal bestseller. And it’s in there, right? We talk about the value of insurance and annuities and lifetime income and build all that into our planning promise out there to consumers. So, probably we went over a lot there but kind of lessons learned were we did have to re-educate and we had to have a process that was client-focused and let people know where products and solutions fit into it to get the most asset, right? And that was really important. Just saying, “Hey, we have this stuff,” was not enough, right? Like, having stuff is fine. Having stuff that fits a planning process that you can show the value of and educate on and drive adoption, that’s very different.

Brad Johnson: Yeah, I love that take. The example I always use because of the term fiduciary is thrown around a lot these days and it’s actually used more as a marketing term than it is the definition of like, “I’m legally obligated to do what’s in your best interest.” But the argument I will always make is access to more options, as long as they’re legally vetted, should always be a benefit to your clients. And what I saw is a lot of fiduciary advisors, and if you looked at their financial toolbox of tools they could use to help their clients and to solve the problems for their clients, they were dealing with maybe half the tools in the toolbox if that because they had completely eliminated the insurance section from that toolbox. And so, I’ve just got and part of that is like maybe it’s the technology that they were on was built for RIAs and it didn’t incorporate insurance. And so, it was just very clunky. Maybe it was they never even learned about them in the distribution model that they grew up in, to your point on re-education.

But if you were to like say, “Hey, here were the reasons that people like didn’t look at all the options when it came to insurance based on your journey,” and maybe it was in Carson, maybe it was other places. Like, what were the reasons advisors just flat out were like, “No. Insurance, I don’t deal with that?”

Jamie Hopkins: Yeah. Look, one was misinformation, not keeping up with where the market is. So, I mean, and that includes like what the technology is like. I mean, you have people that used insurance products in the late 1990s, early 2000s, and maybe the products were fine, but the technology experience and tracking experience and bill pay experience of it is so bad. You know, you’re faxing stuff, you’re getting stuff lost in the mail. You know, things are showing up three months late and they just said, “Look, like that’s not my client experience, so I don’t want to be tied to that.” Now, technology and service got better but if that was your experience, you cut it out because you were like, “Look, I’m getting blamed for stuff that’s showing up three months after.” And I’ve had advisors say, “Look, I kind of stopped doing it after I had a couple of bad underwriting experiences because clients were blaming me for the underwriting, which I can’t control.” And they’re like, they’re getting denied at one place, but then they call up somebody else and get it. And then I’m sitting around here being like, “Well, why can’t my insurance guy get them underwritten and not burn out?”

And so, you have like small experiences like that where some advisors, if you have a big AUM book and insurance isn’t going to drive your revenue, you say, “Well, why am I taking on risk of this like other offering that might cost me a client if it goes poorly?” And so, you saw a little bit of that. Insurance tech was really bad and as firms tried to move more into an integrated tech stack, insurance kind of fell out. Right? Like invest that in other places, tried to build some stuff, but none of it really, I mean, I’d still say that’s a hurdle today for the insurance world, right? It’s like integrated tech experience in comparison to where the asset world got. It’s clunky and far behind and not super integrated. So, that’s a hurdle. And I had another one. Those are the big ones. And to some degree, some advisors took that path I’d say more so in the mid-2000s where one of the marketing and selling tactics was to sell against the insurance world. And you can think of, I mean, there are still places that do that, right? Like, the sale story is we don’t take commissions, we don’t sell you product. We do planning.

Brad Johnson: We’re fee-only. We’re fee-only.

Jamie Hopkins: And it’s a big marketing tactic. Even if you go back to the fiduciary one, I do have a statement about that because I think about this one less than it used to, but I still think about it a lot. So, one of the things, though, is a lot of people list that they do comprehensive advice or holistic financial advice, financial planning. I think in those situations when you market in that manner, you do need to look at things like insurance. What bothers me when you say, “Hey, I do comprehensive planning, comprehensive advice,” or whatever it might be, then you go in and they don’t do any insurance, they don’t do retirement plans, they don’t do banking, they don’t do tax, they don’t do estate. I’m like, “But like you’re not holistic then. Like, you’re not comprehensive. You’re doing a portion of things.” And it’s actually perfectly fine and very normal as a fiduciary to limit your scope of services based on your expertise. So, like doctors, while there are general practitioners, what they don’t usually do is go deep into any one area. They just send you out for it and they send you to a specialist that then does it.

And that’s an okay model, right, is here’s all the other specialists I pulled together. Here’s my insurance partner, here’s my 401(k) partner, here’s my tax partner. But to ignore them and say you’re comprehensive is a problem to me. But if you say, “Look, like I’m investment management. I do investment management. I don’t do insurance,” there is nothing wrong from a fiduciary standpoint there because you’re not telling the world that you’re comprehensive. You know, even under ERISA like that is actually what ERISA prefers is that you limit your scope to what you’re good at. You don’t say you do everything. Like, inside of retirement plans like a 321 or a 338, which are code sections of offerings like you limit yourself to that scope. And ERISA likes that. I say it like ERISA is like a person walking down the street here in New York.

Brad Johnson: It could be a name. I could see somebody named ERISA. You know, you make a good point there. Here, it’s an ethical standard as an advisor. I had this conversation with Kitces when he came on the show and I was like, “Hey, fiduciary, but what’s a fiduciary if you don’t offer all the solutions?” And his point, which I completely agree with was, “Well, if you don’t do it, then you should just be real and say, ‘Hey, we don’t specialize in that, but here’s a referral.’” The problem is when the advisor’s like, “Well, I don’t do that,” but do everything here instead because they don’t want to refer revenue out the door. And so, I think that’s the thing like to your point, if you’re going to be a holistic advisor, be one, like actually follow through on that promise. But if you’re going to say, “Hey, I only specialize in this and not this,” you’ve got to be willing to say, “That’s not me.” Go out the door and maybe go work with this guy. And I just think that’s sometimes hard, especially a beginning advisor that needs the revenue to survive as a business. So, what’s your take on that one?

Jamie Hopkins: Yeah. No, I think I mostly agree with that. I think that, generally, you should be open to referring business out to the world. I think ultimately that will be good for you. Now, the challenge becomes finding the right partner to refer out to because what you don’t want to do is be somebody who starts referring all your clients away and then the person you’re referring to them is taking your clients. Like, look, you won’t exist then so any good you are going to do the world. Like, you still have to think about that part of it. And look, that’s why lots of people and I don’t know, I should pick on any companies, but you just think about like there are companies that offer certain services but if you refer your clients to them, the next thing they’re doing is they’re trying to get your client all the way there. So, then you can’t partner with it. You have to find good partners that kind of adhere to that line. And in the insurance world, 100% of those partners are out there where you can go work to them and refer the insurance business out and they don’t try to steal all the assets or steal the planning from you or commandeer the client away.

So, I think that’s definitely doable but I understand the fear around it. But if you look at mid and large-size wealth firms, including where I am now today too at Bryn Mawr Trust like the convergence of services, which is where we started this one is occurring because it’s what clients want. If you look at surveys about individuals and what they expect to receive from their advisors is they’re saying, “I want investment management. We do it pretty well.” They say, “We want financial planning. We do that pretty well.” But then after those top two, like there’s this huge gap between expected services like insurance, tax, trust. Another really big one is actually business owners want business exit planning help from their advisor and it’s only like 1% to 2% of advisor firms offer that type of help today. There’s a huge gap in expected services and actual services delivered. And so, if you’re just paying attention to that, people want a service and we’re not delivering it. So, bringing insurance in-house, bringing tax in-house, bringing 401(k) in-house, bringing investment management and planning and business exit planning in-house.

And when I say by that in-house is either do you buy it? Do you build it? Or do you partner? All of them work, right? So, you have to find the right partners buy it or build it. And we’re definitely seeing that shift. You’re seeing it in the 401(k) space today and that consolidation advisory firms happening to it. You’ve seen it in the insurance space. I think more so with partnerships, though. You know, a lot more I’d say RIAs and wealth firms used to have insurance in-house and now I see more partnership-oriented in that. I don’t know that I have the numbers to back that up, but I think the number of agencies has decreased. So, my guess is right, like you can kind of prove out in that side. And then tax services, you’re actually seeing that move from referrals to CPAs to coming in-house. That was the one where everybody referred it. And now they said, “You know what, we don’t really need to refer this out because CPA is guess what? Your business isn’t worth that much so we’re going to buy you and wrap you in here.” And that’s been a really interesting dynamic. And that’s not an insult. It’s just saying, look, the market is saying you’re worth 2X and we’re worth 9X, so we might as well bring you here instead of referring the revenue out.

Brad Johnson: Well, I’ve seen a lot. And also, when it comes to estate planning and attorneys, I feel like once RIAs or financial services firms reach a certain scale, they’re like, “Let’s stop this random referral relationship that we can’t really control.” It’s basically bringing the family office experience into those that have less than 10 mil is really what’s happening. One-stop shopping. So, I’ve seen a big trend in that as well.

Jamie Hopkins: Yeah. And then the technologies there got better, too. So, there are some three that I really like. You know, Vanilla has been around a little bit. Steve Lockshin’s company. Trust and estate, we use at Carson and then I invested in a company called Wealth.com, which is an estate planning solve too.

Brad Johnson: Big fans. Big fans of Wealth.com. Yeah.

Jamie Hopkins: Yeah. I love their stuff. I always tell people I invested because I get on stuff and then I just tell people how awesome it is. And I don’t want people to ever think that like I’m just telling them. I want them to know but, to me, I actually always think that’s a good thing because I’m like it’s not because I want to make an extra dollar from you using it. I invested because I believe in what they do like I think it’s awesome. I think their stuff is great. I love the team there and, yeah, super impressed by it.

Brad Johnson: Yeah. And they’ve got good style, I think. Is Adam over there? Is he one of the founders? I’m trying to think.

Jamie Hopkins: Yeah. And Will’s over there and Rafael.

Brad Johnson: I think it was Adam that gave me some custom shoes at Future Proof. That’s why I bring it up. Not only do they have the estate planning game figured out, but they’ve got the experience game figured out too.

Jamie Hopkins: Have you been to their website?

Brad Johnson: Not recently.

Jamie Hopkins: Well, I tell like everybody. I’ve told 12 fintech providers like, “Go to their website.” They have, I mean, their clothing, their brand, their style, their website, they have some of the best, cleanest marketing CX out there like it is phenomenal. The problem, though, is everybody’s always like, “Well, who built it? Who can I hire? I want my stuff to look like that.” I’m like, “Unfortunately, they built it.” So, yeah, they’ll hire a firm, but their stuff’s awesome. Yeah, they do a great job.

Brad Johnson: Yeah, it looks really good. Are they in Arizona?

Jamie Hopkins: Yeah. Arizona.

Brad Johnson: Oh, they’re on Camelback Road. I literally was just right out there. I mean, I literally probably hiked Camelback. We’re probably right next to them. Well, cool. I missed an opportunity because, obviously, we’ve got a lot of independent financial advisors tuning in. And you said, hey. So, obviously, Ron Carson’s a legend in the business and he’s been incredibly good to me. An early mentor when I had first started out in the business, invited me up, spent some time with him. And always been obviously heavy on the asset management side, the BD side and let’s say he wasn’t like to your point, like he wasn’t a big FIA or back in the day they were called in equity index annuities, but a fixed indexed annuity which you really see there’s different uses but it’s become like an established piece of a fixed income and a portfolio used correctly. So, I’m curious, like if you’re speaking out there to maybe somebody that’s like grown up on the asset management side and just maybe hasn’t even been exposed to the use, as you were going to say, here’s what you should look at FIAs, here’s why if nothing else, you should just say, “Hey, should these be in the toolbox?” What would be your kind of top 2, 3, 4 reasons?

Jamie Hopkins: Yeah. And look, I’m probably a little out of date a couple of years now, too, but what worked for us well, you can add in here, was we said same thing that it should be part of the fixed income solution that just in general, you look at it like fixed income and that it can be a very good bond ladder replacement strategy. So, instead of using a bond ladder, you should just compare what’s the cheapest way to buy income here, right? Is it a cheaper way to buy income by buying a bond ladder today? Or is it by buying a FIA? And what we found at the time was it would beat out a lot of bond ladders or CD ladders just from an ability to purchase income at the time like you could purchase cheaper income with sometimes better tax treatment and other things, too. And then who did that research? Roger Ibbotson had research on it that showed you could outperform in that. There are always challenges to research, but we actually found that to be a very positive thing because a lot of advisors use the bond ladder strategy for bucketing early in retirement, and it was just a different way to look at it.

So, that one was definitely one that worked. We did have some exchanges and tax-free exchanges into FIAs, too, so we would look at maybe some old brokerage products. And then the other thing was the invention of kind of the advisory FIA too where you could bill out of it was a big change, I think, because some advisors like, “Look, we’re not doing commission stuff, right? We’re fee only. I can’t build out of them. It’s a headache for my clients.” That ability so we could actually bill out of them in everything and charge against them was big too of just driving adoption that the product had changed. It looks and feels more like an advisory product.

Brad Johnson: Yeah. The products, I mean, I’ve been in the industry since ’07, and it’s insane how much it’s evolved since the early days. Fun Roger Ibbotson story. I was fortunate enough to have him on my previous show and we started talking about just bonds in general and how the math works and you’re talking about basically the longest bull run in the history of bonds was kind of that 30 years as interest rates decreased from the Jimmy Carter days, which obviously that’s going to mathematically bond values are going to go up. And we talked about rising interest rates at the time. We were just at historic lows. What has happened now had not happened yet. And I said, “Roger,” I said, “So, like a good analogy be like if you’re investing in bonds in a decreasing interest rate environment, it’s kind of like being in a river swimming downstream. And if interest rates were to go up, you’d be like flipping around and swimming upstream.” And he goes, “Oh, no, it’s way worse than that.” He’s like, “It’d be like if me the 60,” I don’t know how old he was, like 60, 70 years old at the time.

He’s like, “No, it’d be like throwing me in,” because we were using Michael Phelps in the analogy. He’s like, “Instead of Michael Phelps swimming upstream, it’d be like me swimming upstream.” And so, it was just really cool to hear a guy that really cut his teeth in the securities world like really talk about the power of FIAs as just fixed income in a portfolio. So, that was a really cool moment on that podcast. Do you have additional thoughts just around the math and just what played out in your research?

Jamie Hopkins: Yeah. I interviewed Ibbotson at one point, too, and he said the very same thing a year and a half ago. And he got very negative on the bond world I think last summer-ish. And then bonds did a year and a half ago, whatever it was, the bonds just did terrible since then. Like, he was right about that whole aspect. And yeah, but I mean, our research, I mean, I would say we did more like analysis rather than research. But we were finding a lot of situations where our clients were better off and we could buy income more efficiently with annuities. Fee as being one, sometimes RILA as some of the writers that were out there than we could on the bond or CD or other fixed income markets. So, that’s kind of, you know, we really just approached it from that sense. I mean, that’s one way to use it. But in that use case, we would just look at that and if we could, however we could, buy income more efficiently if that’s what the client was looking for, that’s the way that we went.

Now, you still have to keep the notion of like credits, rating, safety risk profile somewhat together because sometimes I get into the argument and feel like I can buy. I remember one and somebody wanted these like two-year like C-rated ones and I was like, “Yes, they’re better but like there is a different risk profile here. So, like these are not…”

Brad Johnson: You’re like the math is better but the company has to exist two years from now for it to matter, right?

Jamie Hopkins: Yeah. And I was like, “These are not comparisons. Like, yes, it’s better, but like we can’t.” That is one issue that we run into a lot of times. People compare different strategies, but it’s like, yeah, like there are some junk bond stuff out there that looks really appealing, but like it might not pay. And same thing with some other products is like you can’t treat those as equivalent. So, you do always have to get back to or at least somewhat in the same risk capacity for like risk levels when you’re doing that analysis.

Brad Johnson: Yeah. I love the phrase you’ve used a couple of times because this is another hurdle I’ve seen because annuities, let’s just be honest, they are a product that historically has been sold. Because, I mean, you look at how did FMOs become FMOs. Insurance companies created them to educate and distribute product. And so, it was really a sales mechanism. And I think oftentimes to your point, like kind of some of this baggage that advisors carry with them, almost it’s like they check it off the list before they even look at it. And what I see as like to your point on convergence, as you are now licensed to be truly a holistic financial planner advisor to where, “Now, I really do have all these options in my toolbox as an independent guy,” I love the idea of you need income as a retiree. You don’t have a pension, thanks to this little ERISA thing that happened a few years back. How can we purchase income in the most efficient way and just doing the math and letting the math sort it out? And you don’t have to sell anything. You’re just solving now. So, I just love that transition of viewing the use of the product and I think that’s a really important one to look through as an advisor.

Jamie Hopkins: Yeah. I think what’s the most efficient way to purchase income and you can take that a lot further. So, it does go to things like should you spend down investable assets to defer security? The reality in a lot of cases that is the most efficient way to purchase income. Sometimes it’ll be instead of buying a bond ladder, you buy an annuity. So, those are all different ways to approach it. The other thing you mentioned, the annuities were often sold and I had this quote for a long time was I thought that annuities were oversold and underutilized, right? So, we sold. And what I meant by that was that the annuity industry really went hard into selling. And I think Austin positioned annuities in two incorrect ways. One was that they can solve every issue, right? Like, you’d get some of these pitches and it was like the, “And wait, there’s more. And you get four free Cutco knives.” Like, it was like, “And wait, there’s more.” And it was like, okay, to some degree like you don’t want to oversell what a product’s going to deliver because, yes, all of those might be benefits but they all weren’t benefits at the same time.

Like, you often have to give up one to get the other, etcetera, etcetera. And so, those is kind of like overselling of the annuity product. And then that caused people not to use annuities enough because that tends to happen. When you overly push something, people kind of back up from it. And the other thing that was a big issue and still remains an issue, I think that part’s gotten better. I think the other issue for the annuity and insurance world, though, is that every company has distinguished itself in the market by saying we’re different than every other product. And so, when you went and looked at like the FIA world or the RILA world or the variable product, everybody had their own name to it, right? It was the Income Max 47 and like it was different than the other ones. And so, it was really hard to do a comparison between products for a while. And I think that actually did things a really big disservice because the investment world like kind of categorizes stuff together a little bit better, the stuff that got adopted, target-date funds and iShares. And they, actually, I think found a clear path to all run forward.

Now, yeah, there’s differences between products but a lot of times I mean you’ll meet an investment team and I was like, “You know, our product sounded just like theirs. Like, it’s basically the same as that was.” And I thought that that created a lot of confusion for the insurance world is that we couldn’t get behind simpler versions of products.

Brad Johnson: That’s an interesting take. Yeah. When I started in ’07 as a 26-year-old, I bet there were like 10 to 12 established companies. I mean, there were obviously some smaller players but, obviously, you look at the demographic of America, the demand and the need was there. And so, what happens? Like, more competition pops up. But to your point, without a good way to sort through it all, that’s one of the things getting in the way. And that’s one of the things we talk about a lot at Triad right now is how do we create a true holistic financial planning process, and you’ve already hit on a couple of hurdles. It’s the technology doesn’t talk to each other. And once it’s built for insurance or it’s built for asset management and, two, like the siloing of kind of product offerings and product distribution. So, there’s a lot of hurdles but what the advisor actually wants is an easy, seamless way to sort through the chaos, right? Like, can I just call somebody and say, “My client has a million bucks? How do I solve the problem most efficiently?” And that’s what a lot of firms are trying to solve right now.

Now, you mentioned that even right now with the firm that you’re at now, you’re like, “Hey, we’re constantly trying to figure out how do we solve the tax planning, the estate planning, and bring all of these solutions to one place.”

Jamie Hopkins: Yeah. And it’s kind of how we’ve solved the insurance piece at Bryn Mawr Trust. Same thing we partnered in. They don’t want to be specialists in the wealth advisor. And really Carson didn’t want to either. So, we built that centralized hub where all the cases could flow through and they could pick up the phone and call somebody and say, “I just need help,” and like go help and figure it out. Like, I don’t want to sort through all the different companies and ratings and products in the new version and what new rider came out. Like, I needed somebody else to do that. And now that’s a huge value add. If the advisors are going to stay in that space is if they do need that help of sorting through, cutting out the noise. And the classic term, right? We got to make the complex simple for advisors and clients. You know, that’s part of my job. It’s definitely part of your job, right?

Brad Johnson: Yes, it is. Yes, it is. Yeah. Well, I know it is a Friday. I know you’re on the road. Thank you for carving out some time from your hotel room. This has been a really fun conversation. One last. Anything we didn’t hit when it comes to just finding? I want to transition to the do life side here as we wrap up. But anything we haven’t hit that you think important for independent financial advisors out there to think about as we future cast financing where things are headed before we get to kind of a do life side?

Jamie Hopkins: Yeah. This will be kind of one of my bolder prediction pieces is I’ll type two things here. Advisors need to broaden their services long-term to stay relevant. And I think that’s true. You know, that could be a lot broader than even I picture today. I don’t believe it’s going to land in like wellness in the sense of medical advice. Ron, who we’ve mentioned a bunch, right, he does believe that. I don’t think it’s going to be that far but Ron’s a little bit more of a visionary than me, so it might be right. But I just think whether it’s tax services or retirement, if it’s bill pay, family office style offerings, the world is bringing more services to the firms that are on the leading edge. And if you don’t keep up with that, clients are going to find a different home because they want to have that simplicity. They want to have that ease of use of life. And we are moving to a, you know, I think that was like an experience economy for a little bit that kind of got killed and the convenience economy took over. We will pay up for convenience now. So, if you can be the shop that makes it more convenient for your client, you are going to win more often than not long-term.

So, if you’re not thinking like that, it doesn’t mean you become irrelevant tomorrow, right? Client relationships are super sticky, but if you’re thinking about a 10, 15, 20-year time period, absolutely right. That’s more of that competitive how you lose your clients. It doesn’t happen overnight in this space.

Brad Johnson: Well, to prove your point, I think in 1999, Amazon was just selling books online. Now look at them. They allowed us to all be a lot lazier and it worked out okay for them. So, yeah, I think that’s a good thesis. Did you have a second point? Was there another one as well you want to throw on there?

Jamie Hopkins: Oh, I did say I had two but then I got excited about that one, right? Yeah.

Brad Johnson: If you got another one, throw it in.

Jamie Hopkins: I do know the other one. The other one is which we haven’t talked much about, but it’s AI. And AI is kind of a buzzword but it’s really getting back to technology and data. And firms with clean data that use technology will replace the firms that don’t. I don’t see AI in tech replacing the advisor, but I do believe 100% in the firms that move forward. You don’t have to be the leader but you have to be a fast follower in this space, right? They’re going to replace the ones that don’t. And we’ll see consolidation of firms that aren’t doing it. They’ll get bought by the other ones. They will go away. And I get asked a lot, “Hey, I’m thinking about going to this firm and I want to spend my career there,” and I sometimes warn people. It’s like, “That firm’s not going to make it in 20 years. Like, they’re going to get bought by somebody. They’re ten years behind. They got no chance of catching up. They fall further and further behind every year.” And I think that’s really important when you think about how you build your practice, who you partner with, how you’re going to build this out long-term like you have to be tech-forward.

Brad Johnson: Yeah. I read an interesting take, Naval Ravikant. Have you crossed paths on Twitter with him by chance? Naval started AngelList. In my opinion, one of the smartest humans on the planet alive today. But he talks about how leverage has evolved in the history of humanity and looks like… Hello.

Jamie Hopkins: That’s my wife back there somewhere.

Brad Johnson: Hey. Well, see. Welcome to Do Business Do Life podcast. So, I know we’re getting ready to wrap here, so I’ll let you all get to your adventures in New York. But he makes the point that leverage, if you look at the history of humanity, started out with human capital because you would go conquer and like bring over slaves to build things for you. And then money was invented and that became another form of capital as a form of leverage. And then he talked about technology. And if you’re not using that as leverage, you’re just not going to be around long-term. And so, I think it’s how do you apply that leverage that exists today to better serve your clients at a higher level, at a more cost-efficient way, right? It just makes sense. So, well, with that and with your wife clocking in, so this is the Do Business Do Life podcast. One of the things we talk about a lot at Triad is we want to do business with people we want to do life with. It’s not just a monetary transactional relationship. We actually just want to enjoy our experiences and getting together. So, I would love to hear your take, Jamie, like if you were to try to define what does do business do life mean for you, what is it?

Jamie Hopkins: Yeah. Well, I don’t know if anyone’s given a similar answer before, but I think that business or what I think about business is the ability to earn money and have an impact. And that for most people allows you to live the life you want to live. You know, I talk about this a lot when I talk to, you know, I’m President and Founder of FinServ Foundation, a nonprofit for students that are entering our space. And a lot of times I talk to them about like, there is nothing wrong with being wealthy and building a really successful business or making a lot of money. It allows you to have a bigger impact in the world and it often allows you to do the things you want to do. Finances and money and currency are meant to be spent and their means towards an end. So, whether that’s spending time with kids, whether it’s giving back the food, shelters, or building a farm or sustainable food, that’s what business allows you to do and that’s why you want to be successful. I mean, that’s why I have a desire to be successful in business so that I can have some of those impacts out there in the world.

Burt White and I used to joke about this a lot. I mean, my main goal is to be successful enough in business so I can have fish farms. I want to own fish farms so I can produce sustainable fish for the world.

Brad Johnson: No way. I was not aware of that. That’s cool.

Jamie Hopkins: Yeah.

Brad Johnson: So, have you started your first fish farm yet? Has this happened yet?

Jamie Hopkins: I haven’t. But I will tell you, I do look at land that I could… So, the land that works for it is a lot. That’s like a big part of it, right? Like, you can’t just start fish farms in your basement like effectively but I do look at land every once in a while that would be effective for this. But I’m probably five, seven years out from having the capacity in my life to hop into that. But yeah, I would love to but I can’t do that unless I’m successful at the business that I’m also passionate about.

Brad Johnson: Yeah. Cool. Well, I’ll tell you what. Land is affordable in Kansas. So, when you come through looking for that first fish farm plot, come on out. Silver Lake, Kansas, lots of land, lots of open skies. Come on out and I’ll give you the tour. All right.

Jamie Hopkins: Love it.

Brad Johnson: All right. Well, hey, Jamie, really, really enjoyed our time together today. Thanks for dropping all the knowledge you have to the Do Business Do Life audience here and look forward. Hopefully, we get to see each other before next year’s Future Proof. So, enjoy the travels in New York with your wife. And until next time.

Jamie Hopkins: Appreciate it. Thank you, Brad.

Brad Johnson: All right. We’ll see you, Jamie.

Jamie Hopkins: Yeah.

Disclosure

DBDL podcast episode conversations are intended to provide financial advisors with ideas, strategies, concepts and tools that could be incorporated into their business and their life. Financial professionals are responsible for ensuring implementation of anything discussed related to business is done so in accordance with any and all regulatory, compliance responsibilities and obligations.

Copyright ©️ 2023 Triad Partners. All rights reserved.

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