Chief Change Officer
#140 From Dollars to Smiles: Michael Sakraida’s Playbook for Wealth and Joy – Part Two
Wed, 15 Jan 2025
Part Two. Michael Sakraida, the Money Philosopher and author of Money, Balance and Joy: Improving Your Life Story, continues to unravel the art of balancing wealth and happiness. Spoiler: wealth is about much more than just money. In this episode, Michael introduces his three-part happiness equation—monetary wealth, time wealth, and social wealth—and how aligning them leads to a fulfilling life. He calls out Wall Street’s blind spots, takes on risk tolerance myths, and pokes fun at the “Financial Media Smut Club” for ignoring the emotional side of money. Ready to break free from the usual money clichés? Tune in for bold insights, a touch of humor, and a fresh perspective on what financial success really looks like. Key Highlights of Our Interview: Financial Independence: More Than Just a Paycheck—It’s About Legacy “True financial independence isn’t about working for money; it’s about working for joy. And when you’re gone, it’s the legacy—both financial and non-financial—that really counts.” When ‘Aggressive’ Turns ‘Anxious’: The Flawed World of Risk Tolerance Tests “Advisors tick the ‘aggressive’ box, but when the market drops, those same clients can flip out. The problem? Risk tolerance tests don’t dig into the emotional reality behind investing. They aren’t built to handle the emotional rollercoaster of real-life investing.” Financial Media Smut Club: Why Most Advice Misses the Mark “Too many financial articles focus on clickbait rather than offering real, actionable insights. The problem? Writers often don’t understand what they’re talking about.” The Problem with Financial Influencers: Why They Should Be Regulated or Shut Down “If financial advisors need compliance approval for every email, why do these so-called financial influencers get a free pass to spread advice with zero oversight?” Financial Advisors: If You’re Not Asking These Three Questions, You’re Doing It Wrong “Before any numbers come into play, financial advisors should be addressing the emotions tied to wealth: how you got it, what you want to do with it, and your past experiences with Wall Street.” Connect with us: Host: Vince Chan | Guest: Michael Sakraida ______________________ --Chief Change Officer-- Change Ambitiously. Outgrow Yourself. Open a World of Deep Human Intelligence for Growth Progressives, Visionary Underdogs, Transformation Gurus & Bold Hearts. 6 Million+ All-Time Downloads. Reaching 80+ Countries Daily. Global Top 3% Podcast. Top 10 US Business. Top 1 US Careers. >>>100,000+ subscribers are outgrowing. Act Today.<<< --Chief Change Officer--Change Ambitiously. Outgrow Yourself.Open a World of Expansive Human Intelligencefor Transformation Gurus, Black Sheep,Unsung Visionaries & Bold Hearts.EdTech Leadership Awards 2025 Finalist.18 Million+ All-Time Downloads.80+ Countries Reached Daily.Global Top 1.5% Podcast.Top 10 US Business.Top 1 US Careers.>>>170,000+ are outgrowing. Act Today.<<<
Chapter 1: What is financial independence really about?
For me, financial independence is where you don't have to work, but you still work because you get a lot out of it. You're not doing it for the paycheck. You're doing it for the enjoyment. Yes, there happens to be a paycheck that comes along, but if all of a sudden there's a pandemic or your company goes out of business or just for health reasons, you can no longer work,
Chapter 2: How do we define true financial independence?
You don't have to worry about paying the bills. You don't have to worry about having money to leave, have that financial legacy. Independent wealth is both being able to leave a financial legacy, but also a non-financial legacy. that the non-financial legacies is important, if not more important than the financial legacy. To me, you die and you have 20,000 left in the bank.
To me, it's not financial independence. That's just being lucky that you didn't outlive your money.
In another episode, actually it's episode five in season one, I spoke with another friend, my classmate from Yale, Katie Curry, about how our risk tolerance changes as we get older, especially when it comes to career moves. We were both risk analysts for financial institutions, so we know it's not an easy concept to understand and to practice.
Chapter 3: What are the flaws in risk tolerance tests?
Now, when it comes to personal wealth management, how do you explain risk and tolerance of risk to individuals in a way that's easy to understand and embrace?
I think the whole risk tolerance, how that's handled by the wealth management industry is awful. They have a new client, do a risk tolerance questionnaire, just 10 or so questions. Voila, you're conservative, you're moderate, you're aggressive, and that's how we're going to manage your portfolio. That's as much a CYA approach.
activity that the compliance wants to do, but they're not explaining what this means. If you're a conservative person, if the market goes down, say 10% or 15% to your investments, your overall worth on paper,
Chapter 4: How should advisors discuss risk with clients?
goes down 10 or 15 percent you're going to be more upset more stress maybe even unable to sleep at night than the moderate risk person but they don't explain okay here's what this means for you in terms of achieving your financial goal your financial legacy that you want to have
I did an analysis on data provided to me by a financial firm that over a 32-year period, if you're that moderate risk person, advisor has to say to you, you're less likely statistically to reach your financial goal. I had clients like this when I worked directly, they were super wealthy. They had generational wealth. For them to be conservative, didn't matter.
But other clients I had that were in that accumulation phase, being conservative or moderate does matter. The advisor needs to have that conversation in very simple terms, not financial advisor speak, not behavioral finance speak, but again, about their emotions. You need to then say, are you okay with this? Some people say, yeah, I just want to be conservative. Yeah, I want to be moderate.
But others say, no, I'm not okay. How am I going to have this type of legacy? Some advisors do this, and I got this idea, frankly, from an advisor. And when I first heard it years ago, I was like, of course you should do this. So what he does is they say, no, okay, here's what we're going to do. We're going to work together.
It's not going to happen overnight, but it's going to get you further out on that risk tolerance continuum. So that you're going to go from conservative say to a moderate, and then eventually down to aggressive. Now this is only the client wants to do that. And again, with the client understanding this isn't, you can't snap your fingers and have this change happen overnight.
So the other problem with the whole risk tolerance is that it's the questions are taken at a point in time. and a point in time with the economy and with the markets. So you're going to have people that, oh yeah, I'm aggressive after the market's been up and a long bull market creates a lot of aggressive investors. And so now all of a sudden the market goes down even 10, 15%.
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Chapter 5: What are the dangers of following financial influencers?
And some of these aggressive people, their whole risk tolerance just changed. They're flipping out. They're upset. What should I do? I should sell. I should sell everything. Dive into the bunker and wait till the bombs stop going off. So the advisors, though, oh, Al's aggressive. I don't need to call him. I don't need to check in on him. And if he's having a problem, he'll call me.
Sometimes one don't know when the fear and greed emotions are kicking in. And number two, they might be embarrassed to go from, yeah, I know I told you I was aggressive and I know my survey said I was aggressive, but right now I'm really panicking.
Chapter 6: How can we navigate financial advice online effectively?
And so it's an instrument, the risk tolerance survey, the setting isn't fully being used for the benefit of the clients and also for the benefit of the advisors.
This is the last question of the day, and I'd like to pick your brain on the rise of financial influencers, as you mentioned financial media before. Financial influencers on platforms like Instagram, TikTok, and YouTube has sparked a lot of debate regarding the impact on individual investment decisions. On the one hand, they democratize access to financial information. easy to access advice.
On the other hand, there are concerns about their qualifications, the accuracy of the information, and potential conflicts of interest. For example, some may not have formal financial education or may promote investments for personal gain without adequate disclosure. So here are two questions for you.
One, in this current landscape, in your views, what are the potential risks for individuals making investment and money decisions based on all these easily accessible advice? Second question, what advice, what guidance would you offer to someone looking to navigate the vast amount of financial advice online, especially from those influencers?
How can investors, how can everyday people identify and follow advice that is both secure, safe, and hopefully and potentially profitable?
First of all, with them, they should either be licensed and regulated like financial advisors or put out of business is my opinion. The regulators, I don't care what is being regulated, are awful. with handling new technology. So all they see is it's this cool technology, social media, and these people providing some help.
And it's different than a financial advisor's charging a fee or getting commissions and all. They're just awful with it. But you look at Bitcoin and all that, there's still no regulation on that. It just dropped the ball with that. So if I'm on Instagram,
And I have these testimonials from people who did my coaching and they saved X amount of money and say, oh, this person, they save an average of 5,000 a year and increase their income by an average of 20,000 a year. And the FTC, which they're doing, knocks on my door, says, oh, we saw this posting. We need to see all this. We need to see who you did, who did this, what each person's result was.
And if not, then you get a nice fine from the FTC. No one's doing that with these people. whatever, internet influencers. So if I have to worry about what I say and get in trouble or I get in trouble, if a financial advisor has to worry about what they say and do and show any conflicts of interest, for example, then I don't get it. I don't get why all these financial influencers...
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