#367 Michael Sakraida: Money, Media, and the Myths That Keep Us Stuck—Part Two
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How does Michael Sakraida redefine financial wellbeing?
Hi, everyone. Welcome to our show, Chief Change Officer. I'm Vince Chen, your ambitious human host. Our show is a modernist humility for change progressives in organizational and human transformation from around the world. Today, I'm chatting with Michael Secreta, the insightful money philosopher and author of the book titled Money, Balance, and Joy. Michael dives into the philosophy of financial wellbeing, showing that money alone isn't the golden ticket to happiness. He talks about the need for a balanced ecosystem, which includes monetary wealth, time wealth, and social wealth. explaining that total fulfillment comes when all three work together. He also takes on Wall Street, the financial media, and financial influencers, pointing out how they often miss the emotional side of financial planning. from risk tolerance questionnaires that don't account for real-life feelings to the misleading advice all over social media. Michael gives a candid and refreshing take. He also shares practical advice on how we can reclaim control of our finances
Build meaningful legacy and manage life's financial curveballs with confidence. You use the word control. In the media, they don't often use the word control. Instead, they like to use the term financial independence or financial freedom. What should I take on financial independence or freedom? In the last season, episode 7, I had a debate with my friend Gargan.
Why is the concept of financial independence debated?
who is building software to help millennials achieve financial independence. Personally, I don't buy into it. I think human nature always keeps us chasing new desires. So we're never truly independent. What's your raw take on financial independence from a personal perspective?
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, 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.
What are the pitfalls of risk tolerance assessments?
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. 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%, where 15% to your investment, your overall worth on paper goes down 10 or 15%, you're going to be more upset, more stressed, 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, The advisor has to say to you, you're less likely, statistically, to reach your financial goal.
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