Pivot to planning

Throughout the UBS House View Suite, the grey pivot to planning boxes include questions about how each topic relates to an investors' broader financial plan within the UBS 3L framework (see gray box titled Liquidity. Longevity. Legacy. for more information on the 3L framework). This page includes answers to these various pivot to planning questions and also links to additional reading for those who would like to explore a specific topic further.

This month's lessons

Summary: As we look ahead to the second half of the year, we see four key themes that could determine the direction of the market.

Are you trying to time markets, or investing strategically to meet your objectives?

As Peter Bernstein best put it, "Forecasts create the mirage that the future is knowable." While forecasting the next recession has become a popular spectator sport, we believe taking a proactive approach to planning for recessions and bear markets is much more effective than trying to predict when one might occur.

Summary: This month we closed our overweight to emerging market equities and reduced the size of our overweight to EM hard-currency bonds.

How can I protect against poor-performing asset classes?

Individual asset classes (and sub classes) will take turns being overweight and underweight throughout time. Diversification among asset classes is key. Allow your goals and time horizon to help drive your investment decisions. Not headline news.

Summary: We remain risk on, but also hold positions to protect against downside risks.

Do you have more than investment assets on your balance sheet?

Investment assets take the lion's share of attention but you'll probably find that investment assets are only a portion of what is on your balance sheet. The composition varies by house hold, but common items include business interests, residence and other real estate. It's important to account for all items in your financial plan.


Question 1: Will US protectionism spark a trade war?
Summary: Despite recent tariff actions, we do not believe trade frictions will escalate into a full-blown global trade war.

What is your investment horizon?

Success in equities can't be measured in days or weeks. If you want day-to-day stability, hold cash. If you want long-term growth, hold equities. But always make sure your time horizon for judging success makes sense based on the asset in question.


Question 2: Are central banks taking away the punchbowl?
Summary: Central banks won’t keep filling the punchbowl, but we don't believe they're taking it away completely.

Do you have a plan for your short-term and long-term goals?

We believe that investors benefit from aligning their asset allocations to their objectives by segmenting assets into three distinct strategies: Liquidity. Longevity. Legacy. The Liquidity portfolio contains up to five years of sequenced liquidity for upcoming expenses. The Longevity portfolio is a growth portfolio that contains the assets the family will utilize for the remainder of their lifetimes. The Legacy portfolio contains assets that are in excess of what the family needs to meet their own lifetime objectives.


Question 3: What are the real risks to the business cycle?
Summary: Faster Fed tightening and rising protectionism could pose risks to the global business cycle.

How can investors deal with uncertainty?

Flexibility is investors' greatest tool for dealing with uncertainty. For example, the ability to temporarily cut spending during a bear market can be more powerful and less costly than simply taking less risk.


Question 4: Are you prepared for the return of volatility?
Summary: We believe investors should remain invested, but also manage risks.

Does your portfolio have a Liquidity buffer?

What's the solution to volatility? Start by building a Liquidity strategy. The idea is pretty simple. Figure out how much you need to withdraw from your portfolio for the next three years and hold that amount in cash and short-term fixed income separately from the rest of your assets. When we finally do have a bear market, it'll work counter cyclically since your portfolio will become more allocated to risk assets as you spend down the Liquidity strategy.


Question 5: Can emerging markets power ahead in 2018?

Summary: Emerging markets are facing short-term headwinds, but the outlook remains positive for the longer term.

How can I position my assets in the face of uncertainty?

Individual asset classes (and sub classes) will take turns being overweight and underweight throughout time. Diversification among asset classes is key. Allow your goals and time horizon to help drive your investment decisions. Not headline news.

Liquidity. Longevity. Legacy.

A purpose-driven approach to wealth management

Understanding your life and what you want to accomplish is important to how we work together at UBS. We start with questions and a discussion that helps us focus on what’s really important to you. Then, we can help you organize your financial life into three key dimensions: Liquidity. Longevity. Legacy. This UBS approach to wealth management can help you clearly understand where your money is—and why. The clarity it provides is designed to help give you the confidence to do what matters most, no matter what the markets are doing.

  • The Liquidity strategy helps you manage cash flow for near-term spending needs such as general living, entertainment and travel, taxes, purchasing a home, and tuition expenses.
  • The Longevity strategy includes the resources and needs over the course of your life such as retirement, earnings potential, a second home, healthcare and long-term care, college, and caring for ageing parents.
  • The Legacy strategy seeks to help you improve the lives of others through efforts such as giving to family and loved ones, making an impact on philanthropic organizations, and transferring wealth over generations.

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