Financial Plans and "Flexibility"

We can learn a lot about improving our financial plans and the financial plans and advice we give our clients from Leo Tolstoy and Robert Burns.

War and Peace – The Novel

In Tolstoy’s view (extensively expressed in the novel) history was not created by great men or significant events. Rather history was the result of the interaction of millions of individual chains of cause and effect too small to be analyzed independently.The principle “great men” in the novel, Napoleon and Czar Alexander, may have believed they were in charge of their destiny but in fact they were caught up in the same web of circumstance as the rest of us.

In addition, Tolstoy emphasized the irrational motives for human behavior and hence the total unpredictability of unfolding events.  A central premise of the novel was that Napoleon never intended to invade Russia but was drawn into it and did not comprehend the forces that led him to do so.

Tolstoy linked wisdom not to innate logic or reason but to an acceptance of the foregoing state of affairs.  In Tolstoy’s view General Kutuzov, the leader of the Russian forces opposing Napoleon’s invasion, emerged as a great leader not because he developed a logical battle plan and then demanded that everyone follow it as events unfolded.  Rather, Tolstoy explained, Kutuzov’s genius lay in the fact that he was willing to adapt to the flow of events and think on his feet. In General Kutuzov’s experience each stage of a battle turned out to be vastly different from what was expected (by everyone). Based on his experience Kutuzov devised very flexible battle plans and allocated his resources accordingly.  Kutuzov often slept through battles after they began, leaving to his lieutenants the ability to react to changing circumstances. Kutuzov eventually defeated Napoleon.

Well I don’t recommend that you go to sleep but I do recommend that you “be (Tolstoy) wise” and accept the fact that you cannot predict what will happen in the future (both in the markets, in your personal lives  or those of your clients).  Build in flexibility to your financial plans and the advice you give your clients.  Then you can be a modern Kutuzov.

My point:

Don't build a plan based on an anticipated future and then change the plan when the future does not turn out as anticipated. Build your plan to take as many contingencies as possible into account.  It's the difference between a great plan and an ordinary plan - between winning and losing.

Robert Burns, the national poet of Scotland wrote a poem which eloquently describes our human dilemma.  I reproduce a part of it below.

“To a Mouse” by Robert Burns

"But, Mousie, thou art no thy lane,
In proving foresight may be vain;
The best-laid schemes o' mice an 'men Gang aft agley,
An'lea'e us nought but grief an' pain,
For promis'd joy!

Still thou art blest, compar'd  wi' me
The present only toucheth thee:
But, Och! I backward cast my e'e.
On prospects drear!
An' forward, tho' I canna see,
I guess an' fear!"