Jamie Hopkins of FinServ Foundation On The 5 Essentials for Smart Investing
Invest in yourself first: Tying to the last point, investing in yourself cannot be overstated. For most people, you are, and will always be, your most valuable financial resource. This means taking care of yourself mentally, physically, economically, emotionally, and professionally. Continue to invest back into your health and knowledge, which can allow you to be more and more productive over time. This also means having the right types and amounts of insurance to protect your economic value.
As a part of my series about The 5 Essentials of Smart Investing, I had the pleasure of interviewing Jamie Hopkins, President at FinServ Foundation.
Jamie Hopkins has worked with NextGen students for years. A nationally-recognized writer, researcher, and educator, he is a regular contributor to Forbes, InvestmentNews and MarketWatch. Jamie has been published in dozens of financial, educational and legal journals. Jamie is CEO of Bryn Mawr Capital Management and CWO at WSFS.
Thank you for doing this with us! Our readers would like to learn a bit more about you. Can you tell us the “backstory” about what brought you to the finance industry?
My backstory, financial origin story, goes back to family. My mom is my hero, she raised me after my dad passed away when I was eight years old, along with my younger sister. My mom was an entrepreneur and business owner. She had been running a company with my dad when he passed away on a job-site accident. This left her to care for the family in all aspects of life and run a business. I saw the pain, scarcity, and drive of my mom as a parent, grieving spouse, and business owner. I also saw, but didn’t realize it at the time, the power of financial planning for all. As I grew up, I decided I wanted to make financial planning more available for people like my mom. Ultimately, this led me to my purpose — make retirement more secure for millions of Americans.
Can you share with our readers the most interesting or amusing story that occurred to you in your career so far? Can you share the lesson or take away you took out of that story?
Without a doubt, my most important professional story today isn’t what it was even a year ago. Today, it is about focusing on what matters to me as a person. I love work, I really do. I take pride in how hard I work, though maybe I work hard not smart at times, I am driven and compete at a high level. But a year ago, my son asked me if I loved work more than him. This cut me to the core because, while I do love work — I work for my family and for others. Having lost my dad at an early age, I want to prioritize my family. I had not realized how my time traveling, sometimes five to seven flights a week, was impacting my kids. As such, in the past year, I made a major shift to be at home more. This does not mean to me that I stopped working as hard, but I shifted my work to fit the needs of the ones I love. The point of this story is that I want people to realize that you should try not to lose yourself to career and work. Stay focused on what matters to you most in life. Sometimes, it takes the wisdom and insights of a five year old to bring it to our attention.
Are you working on any exciting new projects now? How do you think that will help people?
I am working on three really exciting projects (I know it’s a lot). First, I am working on a retirement planning coffee book with fellow FinServ Board Member Bonnie Triechel. This will be hopefully a fun way to deliver what can feel like stale or boring content to the masses. Second, we are expanding FinServ Foundation to more universities, wrapping in podcasting, webinars, and research to our offering. This allows us to better understand how to help the NextGeneration of leaders and give them the tools to overcome hurdles. Lastly, I am working at Bryn Mawr Trust on a project we call “Wealth as a Service.” Amazingly, only about one out of every five financial advisors can provide trust services to clients in their current set up. Our goal is to take trust services out to the hundreds of thousands of advisors that don’t have access to this resource today to better serve their clients. This should not be a service only held away for an elite or special few but should be available for all that need it.
Ok. Thanks for all that. Let’s now jump to the main core of our interview. According to this report in Fortune, nearly two-thirds of Americans can’t pass a basic test of financial literacy. In your opinion or experience what is the cause of these unfortunate numbers?
The issues of financial education and literacy are far more complex than most people think. Schools do not teach this, but more fundamentally, it is not taught at home. The reality is that if you do not see a path to financial stability and freedom at home, you will struggle later in life. People learn about money once they have money. Just like I didn’t learn how to fix my dryer at home until, one, I had a dryer, and, two, something went wrong with it. While we see the prevalence of “just in time education” through YouTube and other sources today, people are wired for just in time education in most domains of life. To change this, we need to do a better job in school and in the workplace of providing just in time education. But more importantly, we need to take it to the household level — empowering parents to be financially stable through strong public policy and economic growth initiatives. This then allows parents to teach their children and give a pathway of hope. Otherwise, someone who never believes they will have money will not learn about money.
If you had the power to make a change, what 3 things would you recommend to improve these numbers?
I am going broad here, but first, I would require retirement plans to have an educational component. Most offer some basic elements, but they are poor today. I think requiring some education here at the employer level is one way to increase knowledge that parents can later pass to children. Secondly, I would require that these same plans offer a pay-for-financial-planning offering. Many people save at their workplace but still don’t have a financial plan in place. Saving and planning are very different things. Lastly, I would install a baseline income or savings feature for all Americans. One that has some research behind it is to put money aside for all children born in the U.S. that they can access at 18. This helps to create a more level playing field for Americans and should actually boost the U.S. economy, also, it creates a pathway to wealth, an interest in wealth and a more curious mind.
Ok, thank you! Now to the main question of our interview: You are a “finance insider”. If you had to advise your adult child about 5 non intuitive essentials for smart investing, what would you say? Can you please give a story or an example for each?
1) Automate as much as possible. Finance can be time consuming and emotionally draining. We actually make many of our financial decisions based on emotions according to neuro researchers. As such, we want to try to minimize the number of situations in which our emotions can take full control and derail our planning. This is why automating savings, investing allocations, and bill pay can be beneficial.
2) Delayed gratification: This is something I try to teach my children all the time. How can you avoid consuming something today and instead save it for the future? This is true for food, toys, resources, and money. The secret to most wealth building is delayed gratification. I have discussed this concept with my kids as it relates to pumpkin seeds. We have enough property where we live to have a nice garden. Each year, we grow pumpkins and save seeds for the next year to replant. However, my kids also love eating pumpkin seeds. We explain that we need to save a lot of them so they can have more pumpkin seeds in the future. If we eat them all today, they will stop growing, and we won’t have any. It is the same with money and investments. You can spend some today, but you need to save more to grow new money in the future.
3) Concentration is for wealth creation; diversification is for wealth management. A lot of people hear about how important wealth management and diversification of investments are for your finances. However, what is often left out is that you have to concentrate wealth and take calculated risk when trying to generate wealth. If you look at the wealthiest people in the country, most inherited money or were business owners of some type — partners in professional firms or entrepreneurs. However, once you achieve the wealth you want — to maintain it, you will want to diversify your money and invest a bit more conservatively.
4) Consider all aspects of wealth. Wealth is not just your investments and savings. It is your human capital — your ability to earn money and do things. Someone who can fix nothing around their house, can’t mow their lawn, can’t cook food or clean, well they need more money because their human capital ability is lower. As such, consider this part of your wealth building. In addition, consider things like your house and personal items as part of your overall wealth and know how to use them to improve your life.
5) Invest in yourself first: Tying to the last point, investing in yourself cannot be overstated. For most people, you are, and will always be, your most valuable financial resource. This means taking care of yourself mentally, physically, economically, emotionally, and professionally. Continue to invest back into your health and knowledge, which can allow you to be more and more productive over time. This also means having the right types and amounts of insurance to protect your economic value.
What are your thoughts about investing in cryptocurrency? Can you explain what you mean?
Let me take this a bit broader. Cryptocurrency is a small subset of a new technology system. The digitalization of our world is extremely new and changes daily. Digital currencies have actually been around for decades now, but in comparison to other types of currency, it is in its infancy stages. We still don’t know how to regulate, track, transact in, or manage these assets. However, crypto and other digital currencies are here to stay as part of a digitalized world. They are an improvement from a technology standpoint that better aligns with the needs of our world today. Now, from an investing standpoint — it might be hard to benefit long term from investing in any technology. For instance, in the 1900s there was likely no more important technology than aviation. However, they were a net negative investment during that time period for investors. Disruptive and needed technology does not always provide great investment returns even though it can reshape our planet and lives.
What are your thoughts about daytrading, using apps like Robinhood? Can you explain what you mean?
Most day traders lose money. The more you trade, the higher likelihood it is you see your returns decline over time. This is actually data that comes directly from Robinhood and other custodians. The reality is that the market is very efficient nowadays; most moves are built into the market, and trying to take on short term trends rarely works out en masse. Sometimes, you can know an industry or trend well enough to predict it, but then you mistakenly convince yourself that you can predict others — which you likely cannot. Statistically there is not much value in day trading. Now, if you enjoy it and you learn from it as an entry point into finance, by all means have at it. Just don’t risk the house on it when the odds are against you.
None of us are able to achieve success without some help along the way. Is there a particular person who you are grateful towards who helped get you to where you are? Can you share a story about that?
No one achieves success alone. We live in a connected world and hundreds of people help your journey. Think about it. Someone built the roads you drive on, the technology that powers your phone and computer. Without them — you likely wouldn’t be where you are today. For me, it is my mom. She has always been my greatest supporter. She raised me, showed me the value of hard work and, at the same time, how to triumph over great loss and sorrow. From a professional standpoint, I have had what I would say are four or five true mentors. The reality is that they have come and gone during different periods of my life when I needed them the most. While all remain a part of my life today, it has changed. This is not what I hear from everyone. For some people, they find one mentor and connect for life. I have definitely benefited from finding new mentors when I reach new challenges in life.
Can you please give us your favorite “Life Lesson Quote”? Can you share how that was relevant to you in your life?
“Practice does not make perfect. Practice makes habit.” Many people know the saying that practice makes perfect, but it does not. If you practice bad habits, you will only get really good at doing bad things. Instead, perfect practice will make perfect habits. So, practice what you want to create as a habit in life.
You are a person of great influence. If you could inspire a movement that would bring the most amount of good to the greatest amount of people, what would that be? You never know what your idea can trigger. :-)
Funny enough, this will have nothing to do with finance but speaks even more fundamentally to the hierarchy of needs. When I look at financial planning, we sit further up on level of needs. We need food and shelter first before we can care about financial planning. I think the greatest threat facing humanity and that currently exists is shortage of food. Here in the United States, we have 13 million children that live in food-insecure homes. We also have a global risk of clean water access. If you want to positively impact the most people, we must all consider what effect we are having on food and clean water security at a global level. I have been involved with NoKidHungry and CharityWater for years. These organizations are doing the work to make the world a better place.
Thank you for the interview. We wish you continued success!
