Be prepared: Plan, Protect, Grow

The financial planning framework to help you achieve your short- and long-term goals.

To be prepared for the road ahead, it’s critical for investors to have a plan, protect against downside, and look for growth opportunities.

Despite the good start to 2019 for markets, there is still clearly cause for caution. Global growth is muted, earnings growth is slow, the bond market is telling us to worry, and there are plenty of risks which could still upset markets.

We're in an environment in which investors need to both prepare for near-term risks and position for long-term growth. It might be tempting to try to time the market, but history suggests this is almost impossible. We recommend that investors Plan, Protect, and Grow.

How to plan for your long-term goals?


The starting point for protecting and growing your wealth is having a clear plan, linked to your financial goals. The past six months have shown how times of uncertainty create the potential for very costly investment decisions. Our Liquidity. Longevity. Legacy. (3L)* approach to wealth management can help you plan for your long-term goals while reducing the danger of falling prey to poor decisions during periods of market volatility. The 3L framework allocates your wealth into three strategies:

A Liquidity strategy is designed to fund cash flow needs for the next two to five years. Investments should be held in stable assets with low volatility, such as cash and/or a high quality bond ladder.

A Longevity strategy helps you meet your financial goals for the balance of your lifetime, and is characteristically well-diversified across asset classes with a growth orientation. The ideal allocation is customized to align with your assets, goals, financial personality, and values.

A Legacy strategy is for assets in excess of what you need to meet your lifetime objectives. Its investment portfolios can be more aggressive and could be less liquid than those in the Liquidity or Longevity strategies given the time horizon is much longer term.

How can you protect your financial portfolio against downside risk?


Equities are an important part of any long-term portfolio growth strategy. But slower economic growth and various macroeconomic risks mean that investors need to think carefully about downside protection. Our 1Q Investor Sentiment survey showed that 69% of investors are already hedging the downside risk in their portfolios. In our view, the most effective strategy for managing downside risk is diversification, both within equities (by diversifying across regions) and by holding the right balance of asset classes. To add a more dynamic risk-management layer, investors can consider incorporating quantitative strategies to manage the portfolio's equity allocation. Our recommendation:

  • Diversify across regions
  • Diversify across asset classes: don't forget bonds
  • Incorporate quantitative risk mitigation strategies
  • Diversify within fixed income

Where are the best portfolio investment opportunities?


First, investors worried about the state of the short-term economic cycle can invest with additional confidence by aligning with secular growth trends. Two of our CIO equity model portfolios—Quality Growth at a Reasonable Price (Q-GARP) and Mid-cap—are specifically geared to incorporating these trends into the US equity sleeve of the portfolio.

Second, we recommend focusing on enduring trends such as our Long Term Investments (LTI) series, our House View Sustainable Investing portfolios, and specific investing themes such as Enabling technologies, Fintech, and Sustainable Value Creation in Emerging Markets.

Last, but not least, holding too much can be a key obstacle to portfolio growth. For investors who have found themselves stuck on the sidelines—hoping in vain for a market pullback to offer a better entry point—we highlight strategies to help put cash to work while also mitigating the risk of "bad timing."

Video "Be prepared: Plan, Protect, Grow."

Watch the video to find out how the Plan, Protect, and Grow framework works and how it can help investors prepare their portfolios for potential market volatility.

To read the full version, download the "Be prepared: Plan, Protect, and Grow" publication.

Be prepared for the road ahead with the Plan, Protect and Grow framework.

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