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: Over our six-month investment horizon we expect stocks to advance, thanks to sound economic fundamentals. But higher uncertainty means we also hold diversified counter-cyclical positions.

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

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.

Summary: Despite concerns of a recession or bear market, there are strong signs that economic and earnings fundamentals are still solid, and we remain mid-cycle.

How can investors plan for bear (and bull) markets?

Although our economists and strategists do not expect a recession in the United States or a sharp decline in equity prices, it is still important for investors to build resilient portfolios that can withstand an economic or market shock. Following a market decline, it can be hard to rationalize and maintain large equity positions. But when investors build their asset allocations based on goals and objectives, they know exactly why they own everything in their portfolio in the first place, making it easier to maintain their positions.

Summary: We remain overweight global and EM equities, but also hold certain positions to protect against downside risks.

What does diversification have to do with your goals and objectives?

Individual asset classes (and sub classes) will take turns being overweight and underweight throughout time, but your goals and objectives should remain a crucial part of your investment decisions. Regardless of the tactical shifts, a diversified portfolio is key in the long-term.


Question 1: Should investors consider portfolio insurance?
Summary: Hedging may help offset risks to our risk-on stance, but it is important to be selective because insurance can be costly.

How can investors protect against downside risks?

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. Despite our risk-on positioning, we've begun to add hedging positions that will also help protect during an equity market correction. We don't see this positioning as contradictory in any way. We want investors to hold portfolios that will do well if our forecasts are correct, but will also do reasonably well if we are wrong. Simply put, we don't want your ability to meet your objectives to be predicated on our ability to forecast the future.


Question 2: Can markets regain their composure?
Summary: Volatility is unlikely to return to abnormally calm levels, but we still think equities can grind higher given strong fundamentals.

What is your investment horizon?

Since 1900, the US equity market has sold off by 5% about three times per year, 10% about once per year, 15% roughly every other year, and 20% or more every three to four years. Meaningful, but somewhat random, declines are part of the bargain in equity market investing and should be expected. The challenge for investors is to use these events as opportunities, instead of seeing them as continuous surprises.


Question 3: Will the threat of a trade war derail markets?
Summary: Despite recent tariff actions, trade frictions should not escalate into a full-blown global trade war.

What should I do in the face of uncertainty?

Think about what's "normal" in relation to your investment goals and time horizon. Investors should not hold equities to meet their upcoming liquidity needs; they should, however, be invested in equities to meet their longer-term objectives.


Question 4: Should the US fiscal deficit worry investors?
Summary: America's rising deficit is a long-term concern, not a short-term crisis.

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.


Question 5: Can emerging markets power ahead this year?
Summary: Recent volatility does not undermine strong global growth fundamentals that should continue to fuel further EM equity gains.

Is your portfolio well diversified?

In 2017 emerging market equities were the top performing asset class, but history shows that the best performing asset class in one year doesn't mean it's set to be the best performer in the next. However, it's also important not to make investment decisions solely on alarmist headlines and, in the case of emerging markets, the forebodings of trade wars.

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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