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: We believe the worst of the recent market volatility is over, but we're also unlikely to see a return to the abnormal calm that preceded it.

Pivot to planning

Should I change my asset allocation given the recent correction?

Relative to the market calm that many of us had gotten used to, a dip of the recent days’ magnitude came as a surprise to many investors. Be proactive, not reactive. It is crucial to set up a long-term financial plan ahead of time – one that an investor can live with. It should be based on an investor’s individual goals, values, and needs so there is no need to react to everyday market movement or make investment decisions at times when emotions can cloud financial judgment. If designed well, the financial plan and investment strategy should already accommodate for risks and market changes.

Summary: While US fiscal stimulus has amplified concerns of an abrupt return of higher inflation and interest rates, we still believe the Fed will raise interest rates gradually.

Pivot to planning

Should investors and retirees worry about increasing national debt?

The recent tax changes add to the deficit. In the immediate future some families can take advantage of lower taxes. Longer term, something has to give…higher taxes and/or reduced benefits, which means retirees will need more resources to meet their objectives.

Summary: This month we add an overweight to US 10-year Treasury bonds vs. cash and increase our overweight to emerging market debt.

Pivot to planning:

Are there new opportunities for investors in today's market?

We don't know what the next bear market will bring, but it's important to remember that duration matters as much as magnitude when it comes to real-life portfolios. This is also why we believe a multi-year Liquidity portfolio is so important for investors and long-term performance.

Question 1: Will calm return to markets?

Summary: Volatility is unlikely to return to abnormally calm levels, but we still think equities can grind higher given strong fundamentals. 

Pivot to planning

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: Should rising bond yields spook equities?

Summary: The ride is getting bumpier, but for now we don't believe the rise in bond yields will derail equities.

Pivot to planning

Is your portfolio well diversified?

An asset class that was the best performer in one year is unlikely to be the best performer in the future. Therefore investing in just one asset class is considered a very risky strategy. Rather than putting all eggs in one basket, holding a diversified portfolio is a good way to reduce risk.

Question 3: Is the end of easing a cause for concern?

Summary: Markets should be able to withstand gradual monetary policy normalization in the US and abroad.  

Pivot to planning

Is the S&P safer than cash?

We're 8 years into negative inflation-adjusted returns in cash. Inflation has been creeping up and is now roughly 2%. if you have cash that you won't need to spend for a few years you should identify it as such and put it to work.

Question 4: What does a weaker dollar mean for markets?

Summary: As the US dollar stays under pressure, we see positives for a number of our tactical asset allocation positions.

Pivot to planning

What does a weaker dollar mean for retirees?

Even if you buy everything from US stores and never leave the country, a weaker dollar could impact your purchasing power in retirement. This is one reason we think it's important that all investors have some international exposure on their balance sheet.

Question 5: Can emerging markets power ahead in 2018?

Summary: Recent volatility does not undermine strong global growth fundamentals that could continue to fuel further EM equity gains.

Pivot to planning
Do you need to hedge currency risk in international equity portfolios?

Currency exposure helps hedge some of the long-term risks investors have to worry about. Higher-than-expected inflation or a drop in the value of the dollar can impact the long-term purchasing power of an investment portfolio. Currency exposure (gained through holding non-US assets and not hedging the currency exposure) is one of the simplest ways to address those risks in an investment portfolio.

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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