Alice in Wander-land

As children, we all heard the story or watched the movie Alice in Wonderland. Alice was walking down a path and reached the forest where there was a big tree covered in signs pointing to different forks in the road, and she stopped in her tracks, faced with a big decision.

“Which way should I go?” she said, rhetorically speaking.

The Cheshire cat immediately appeared in the tree and replied, “Where are you headed, my Dear?”

Alice replied, “I really don’t know.”

At this, the cat provided some rather profound advice for a children’s movie: “Then it really doesn’t matter which path you take!”

I frequently start my financial planning roadmap session with this story and then ask my clients – how does this story relate to how you make financial decisions? In other words, do you make decisions in life like Alice in Wonderland? Just flip a coin or pick a path and move on? The majority of my clients will eventually admit that is pretty much it. They just follow their gut or flip a coin and choose a path, wandering through life, oblivious to the outcomes.

Now imagine that a friend offers to fly Alice overhead in a hot air balloon, showing her where each path leads. With someone anticipating all possible outcomes, uncertainty and fear are replaced with confidence and assurance. Financial planning is that bird’s eye view of the paths before you, from beginning to end. The primary benefit for those who complete the financial planning process is they are able to make more informed decisions about their life.

I spent five years in the Navy, after college, and part of that time was on a nuclear submarine, the USS Tinosa (SSN-606). When we went to sea, it was nothing like a holiday cruise! We frequently stayed submerged for two months or more. One of my first questions for the Captain on my first cruise was, “Do we know where we are going? What happens if we run into a mountain at the bottom of the ocean?” The Captain assured me that the Navigator knew what he was doing, so I learned to trust in the Navigator to make sure we ended up where we wanted.

When I decided to become a financial planner, it was a logical career choice for me. I believe we are all a product of the sum of our experiences over time. After working with hundreds of clients over the years, I have seen some patterns in their behavior. I was always interested in how people make financial decisions about their future. In the investment world, this is called behavioral finance. It’s a tool for predicting how investors will behave in different circumstances. For example, studies show that the fear of loss is many times more powerful than the thrill of gains. Go figure!

Why is this important and what do investor behaviors have to do with financial planning? Look up the term “Dalbar Study” online and see what 30 years of research has shown about the impact of emotions on investment behavior and performance. What has history taught us about even the very ‘best’ market timers? They will get it wrong more often than they will get it right! If clients tend to make their financial choices by the seat of their pants, does it not stand to reason that if they make more informed decisions, they will tend to achieve better outcomes in life?

Let me ask you a question: Do you have somebody who knows what they are doing, helping you navigate your way through life? Or are you making choices at each fork in the road like Alice in Wander-land?

Sean Barrett is Principal and Founder of Cornerstone Wealth Advisors. He can be reached at