Planning with Uncertainty

Zero Dark Thirty is a thriller about the global pursuit of Osama Bin Laden. A CIA operative determines he is living in a compound in Pakistan, but few believe her analysis, until the meeting scene. During this scene, the power players assess the likelihood that Bin Laden is living at the compound. One associate tells the group, “We don’t deal in certainty, we deal in probability.”[1] The members are approximately 60% positive that he is living at the site until they ask Maya what she thinks. She says, “A 100% he’s there. Okay, fine, 95% because I know certainty freaks you guys out, but it’s a hundred.”[2]

Financial planning is clothed in uncertainty – a combination of math, assumptions, predictions, and guesses. Most financial planning models rely on intuitions about the future, and financial planners are aiming at moving targets. A change to one metric will reverberate through the plan. If I modify the rate of return by 1%, it can have life-altering consequences for a client. Despite the uncertainty, a written plan is still recommended for all investors, because as John Maynard Keynes said, “It is better to be roughly right than precisely wrong.”

Regardless of the environment, uncertainty is ever-present even in the best of times. Last year the stock market and economy were humming. The future was bright, investors were confident, but then the Coronavirus arrived, and uncertainty escalated quickly.

To learn more about planning with uncertainty, I contacted Captain Lawrence G. Getz III, Commander of the University of Michigan’s Navy ROTC program. Captain Getz is a Navy helicopter pilot who has flown more than 2,500 hours, including 500 combat hours in the SH-60 Seahawk helicopter. He was also the Executive and Commanding Officer of the USS Kearsarge. For his service, Captain Getz has earned the Defense Superior Service Medal, Legion of Merit, and two Meritorious Service Medals, to name a few. Captain Getz knows plenty about planning with uncertainty, and he has learned a thing or two during his twenty-nine years in the Navy.

Before each mission, he and his team would script out their pre-planned responses (PPR). Captain Getz said, “It‘s like Tom Brady throwing to different receivers. If one is covered, he looks for the next receiver, and so on until he finds an open one.” He added, “Tom Brady and his teammates practice the routes, they are pre-planned.” Part of his planning is to make smart decisions every day and take precautions. “The smart decisions you make today will make you better years, and decades from now,” he added.

“No plan survives the first contact, but the training and trust will get you through the bad days,” said Captain Getz. I asked him how he dealt with his emotions while flying. He said, “Compartmentalize your emotions, put them in a box, and execute your plan. Being afraid is normal, but do not make emotional decisions in highly volatile times. Do not make decisions in fear.” He added, “We are always dealing with VUCA – volatile, uncertain, complex, and ambiguous situations.”

Emotions play a significant role for investors. If you let them manipulate you, it can have negative consequences on your financial future. I asked Captain Getz how individuals should deal with fear, and he said, “Look to historical spikes. Individuals had the same concerns and fears ten or twenty years ago as people do today, but we (Americans) made it through. We are resilient. We put our head down and make it out.” He talked about people’s reaction to New Orleans after Katrina ripped through The Big Easy. He said, “People did not want to rebuild the city; they wanted to tear it down. But that’s not what we do; we make it better.”

In a recent report from Morningstar: A Behavioral Guide to Market Volatility, they note that “volatile times can also make us more prone to behavioral mistakes.” They added, “When we predict what’s going to happen in the future, our minds naturally reach for what happened most recently.”[3] We believe current events will last forever.

Captain Getz relies on his team through pre-planned responses and constant communication. How does he know when it is time to waive off a mission? When is it time to get out of a bad situation? He said, “His team talks before each mission.” For example, he tells them, “If he is on final approach, and he is taking enemy fire they should remind him to waive off.” Communication and planning are paramount.

Reviewing each mission is critical to his team’s success, and they will evaluate each one when they return to base. He said, “You have to check your ego at the door and have the conversation about the mission. Was it clear? What did you think? We must communicate to work better.”

Captain Getz flew with a Smart Pack strapped to his knee – a 5×7 card, a checklist for each mission. The card included details about the mission, navigation, code words, etc. He said, “If I forgot my name, I could look down at the card and follow the plan.”

Building and developing a team to deal with uncertainty is also important to Captain Getz. He relied on his team frequently, and he spent considerable time hanging out with his crew. His team would work out, walk, eat, read, and drink together. The camaraderie “made them better teammates.”

I asked Captain Getz how he celebrated his victories. He said, “Celebrate humbly, take pride in your work, take pride in working well together.” He added, “I look to provide meaning, and I know we are serving something bigger than ourselves.”

As an investor, how can you incorporate Captain Getz’s wisdom? Here are a few suggestions.

  • Develop a written plan for your pre-planned responses (PPR). Your written plan will help you navigate your financial future. Decide beforehand how you will react to a falling market, a shifting economic environment, or a change to your employment status.
  • Build a team. In addition to your financial planner, incorporate your CPA, attorney, insurance agent, mortgage banker, and other professionals to assist you with your planning needs. Your team can guide you through challenging times; they are your financial support group.
  • Communicate with your team and loved ones. Let those most important to you know about your financial intentions. Inform them of your plans and show them where you keep your relevant documents like wills and trusts. If your situation changes, let them know as soon as possible.
  • Make smart, short-term decisions every day. Your daily decisions will have generational consequences.
  • Control your emotions. Avoid all financial decisions if you’re afraid or fearful. Talk to your team or reference your plan before you proceed. If you’re emotionally paralyzed, wait 24 hours before making any adjustments. As an investor, you can only control how much you save and how much you spend; everything else is beyond your grasp, so let it go.
  • Do not wait for perfection. If you’re waiting for 100% certainty before proceeding, you’ll never execute your plan. By the time the all-clear signal is given, it’s too late to act. Make the best decision you can with the information you have and advance accordingly.
  • Review your plan. Review your plan regularly to ensure your goals are still intact. Do not revise it if you are on target to achieve your goals. If your plan has been dislocated due to the recent market turmoil or some other factor, adjust it as needed. I recommend reviewing your plan quarterly.
  • Celebrate your victories. It’s okay to enjoy the fruits of your labor and celebrate your wins. If you have reached your goals, rejoice in your success.
  • Serve others. Serving others with your time, talent or treasure is humbling, especially if you’re helping those who can’t pay you back. It’s hard to worry about yourself or feel discouraged when you’re lending a hand to someone in need. During this economic downturn, look for opportunities to do some good.

We are in uncertain times, but we will prevail. Our country has faced many challenges, but we’re still standing. We are still fighting.

Fair winds and following seas.

“A good Navy is not a provocation to war. It is the surest guaranty of peace.” ~ Theodore Roosevelt

May 18, 2020


Bill Parrott, CFP®, is the President and CEO of Parrott Wealth Management located in Austin, Texas. Parrott Wealth Management is a fee-only, fiduciary, registered investment advisor firm. Our goal is to remove complexity, confusion, and worry from the investment and financial planning process so our clients can pursue a life of purpose. Our firm does not have an asset or fee minimum, and we work with anybody who needs financial help regardless of age, income, or asset level. PWM’s custodian is TD Ameritrade, and our annual fee starts at .5% of your assets and drops depending on the level of your assets.

Note: Investments are not guaranteed and do involve risk. Your returns may differ from those posted in this blog. PWM is not a tax advisor, nor do we give tax advice. Please consult your tax advisor for items that are specific to your situation. Options involve risk and are not suitable for every investor.















[1], Website accessed May 17, 2020

[2] Ibid

[3] A Behavioral Guide to Market Volatility: How Behavioral Science Can Help Advisors During Market Turmoil. Morningstar Research by Samantha Lamas, Behavioral Researcher and Steve Wendel, Head of Behavioral Science

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