As investors become increasingly concerned about where to put their money, WealthBriefing discussed with Eva Lindholm, head of wealth management UK and Jersey at Swiss bank UBS, its purpose-driven approach to helping clients align their values through their investment strategy.

UBS's approach to wealth management focuses on three the "Ls": Liquidity, longevity and legacy, aka the "UBS Wealth Way." This helps clients find the right investment and asset allocation strategy, one of the Swiss firm's senior figfures told WealthBriefing this week.

Eva Lindholm, head of wealth management for the UK and Jersey, noted how 2022 had so far been tough for investors as markets fell. 

“Our client base is becoming increasingly younger and diverse and we are working with them to see what works best to meet their needs and values,” she said.

Setting out UBS’s strategy, Lindholm talked about the three "Ls" and how these bring together tangible and intangible assets and liabilities, as well as the clients’ or the family’s available resources. 

We spoke to the bank at a time when wealth managers are wrestling with volatile markets, high inflation and rising central bank interest rates. In the UK, government bond yields have risen sharply, and sterling has fallen, partly in response to worries about the UK government's package of tax cuts, and moves to contain energy bills, as announced last Friday. The dollar has also risen against a number of currencies, buoyed by a perception that the US Federal Reserve is ahead of most countries in tightening monetary policy. 

Liquidity 
At UBS, assets and resources in this "liquidity" part of its strategy are allocated to match expenditure so that they provide sufficient liquidity for the next one to three years.

“We wouldn’t advise clients in this strategy, for example, to put their money into private equity given it has a longer investment time horizon, but instead recommend shorter-term investments like a floating rate or short-dated bonds, that are typically considered lower on the volatility scale,” Lindholm said.

Longevity
Longevity relates to the resources a client needs to use for the rest of their lifetime, with a considerable portion of an investor’s long-term assets being allocated in this area. It is managed to achieve a well-diversified portfolio, keeping an eye on inflation and managing downside risk. 

“We would advise clients here that they can make investments that are less liquid or even illiquid – such as stocks, bonds, alternatives such as hedge funds and private equity – which will protect wealth and grow faster than cash deposits. They need to be ready to lock money here for five to 10 years to benefit from the illiquidity premium,” Lindholm said.     

Closer to retirement, this strategy should be completely funded, with assets earmarked for spending over the next few years starting to move into the liquidity strategy, she said.

Legacy
This term focuses on what a family can do to improve the lives of others, supporting causes, for instance, that reflect their values such as education or environmental issues, with the time horizon often measured in decades. “Investments here are often geared towards illiquid assets,” Lindholm said. 

Looking ahead, Lindholm said that with inflation levels high and interest rates rising, there are benefits in volatile markets of holding defensive and quality stocks, such as healthcare and consumer staples.

"In the longer term, renewables can be interesting as well as technology stocks like automation and robotics can add value," she added.