“Losing sight of one’s goals” is both a common phrase in our language and a just-as-common mistake people make in their lives overall, and their wealth management in particular.

Often, a loss of goal clarity derives from failing to adjust our goals to fit the realities of our current life stage. The wide-eyed goals of a newly minted MBA, for instance, differ greatly (and should) from those of a seasoned executive—even if that is the same person.

So, the real question is not whether to adjust your wealth-management goals, but how, when and what strategies you might employ to put your goals in synch with your life stage.

Today’s clients face a bewildering array of questions: Should I invest in stocks or bonds? How much risk do I need to achieve my goals? Do my current assets match my future liabilities? For corporate executives, the equity they hold in a single company may generate significant wealth, but they also own concentrated, and sometimes illiquid, holdings of company stock and options that can create high volatility and tax-planning issues.


Traditionally, a single investment portfolio was created based on the client’s risk tolerance and projected cash-flow needs. But, because clients often did not understand the link between the portfolio’s structure and their unique goals, client meetings often focused merely on how the portfolio performed against benchmarks, rather than measuring its progress toward intended goals.

To help get goals and portfolios in synch, we suggest employing a wealth-management framework that divides a client’s assets into three dynamic and adaptive portfolios: a “liquidity” portfolio, a “longevity” portfolio and a “legacy” portfolio.

  • The “liquidity” portfolio is designed to meet the client’s near-term (two-to-five years) cash-flow needs (general living expenses, upcoming tuition payments, capital calls) and is typically funded with conservative investments like cash and short-term bonds.
  • The “longevity” portfolio is constructed to provide financial support for long-term goals (education, retirement) across the client’s life expectancy. This portfolio is hedged for risk and generally based on a balanced or asset-growth allocation. Its size depends on projected future expenses, including general living expenses, education costs, medical costs, routine charitable gifts, weddings, vacations, etc.
  • The “legacy” portfolio contains assets not needed for the liquidity and longevity portfolios. It has the longest time horizon, so it usually holds equities, including illiquid investments, such as private equity. The legacy portfolio is available to fund strategic gifts to family and charity.
  • Also, while the “liquid,” “longevity” and “legacy” pools all have their own distinct time frame and risk profile, each pool works across the entire planning spectrum. Meaning that each, from its own unique goal perspective, addresses investment planning, estate planning and income-tax planning, as well as charitable-planning strategies.

    This approach further includes specific techniques for building the “liquidity” and “longevity” portfolios, and for protecting the “legacy” portfolio.

    In sum, by dividing assets into “liquidity,” “longevity” and “legacy” portfolios, not only can you better understand your position in relation to your goals, you can be more confident that those goals will match your life stage and maximize your family’s intergenerational wealth.


    Bryan Stephens is a financial advisor with UBS Financial Services Inc., 299 Park Avenue, New York, NY 10171. UBS Financial Services Inc. financial advisor(s) engage Worth to feature this article. As a firm providing wealth-management services to clients, UBS Financial Services Inc. offers both investment advisory services and brokerage services. Investment advisory services and brokerage services are separate and distinct, differ in material ways and are governed by different laws and separate arrangements. It is important that clients understand the ways in which we conduct business and that they carefully read the agreements and disclosures that we provide to them about the products or services we offer. For more information visit our website at ubs. com/workingwithus. The strategies and/or investments referenced may not be suitable for all investors. UBS Financial Services Inc., its affiliates and its employees are not in the business of providing tax or legal advice. Clients should seek advice based on their particular circumstances from an independent tax advisor. The views expressed herein are those of the author and may not necessarily reflect the views of UBS Financial Services Inc. UBS Financial Services Inc. is a subsidiary of UBS AG. Member FINRA/SIPC.