(۶Ƶ)

Key points

  • It is straightforward to build a portfolio that prioritizes capital preservation, a portfolio that focuses on generating lifetime income, or a portfolio that aims to maximize growth potential. It's far more challenging—perhaps impossible—to build a static portfolio that accomplishes all three of these objectives effectively at the same time.
  • By segmenting wealth into three distinct strategies, the Liquidity. Longevity. Legacy. framework aims to help families build portfolios that balance their competing objectives, and to help them adjust these portfolio over time to reflect changing priorities.
  • In this short article, we discuss some of the reasons the Liquidity. Longevity. Legacy. strategies may help to uncover opportunities in a family's investment portfolio and financial plan.
    This report has been prepared by ۶Ƶ Financial Services, Inc. Please see important information and disclosures at the end of the document.
    The authors of this marketing document transitioned from CIO Research to Global Investment Management on 1 July 2025. This document constitutes sales and education content, not a research report, and it is not developed or held to the standards applicable to independent research.
    _Time frames may vary. Strategies are subject to individual client goals, objectives and suitability. This approach is not a promise or guarantee that wealth, or any financial results, can or will be achieved._The Three Laws of Robotics

I loved reading Isaac Asimov's I, Robot novels when I was growing up. In these stories, robots are governed by the famous Three Laws of Robotics—rules designed to keep them on the straight and narrow:

  • First Law: A robot may not injure a human or, through inaction, allow a human to come to harm.
  • Second Law: A robot must obey a human’s orders, except where such orders would conflict with the First Law.
  • Third Law: A robot must protect its own existence as long as such protection does not conflict with the First or Second Law.

These laws were a powerful literary device. At first, they seem rock solid, but as the stories unfold, conflicts between the laws lead to unexpected consequences. Robots and humans alike must navigate tough choices, balancing safety, obedience, and self-preservation.

For example, if telling the truth might harm a human’s feelings or cause distress, does that violate the First Law? Is a “harmful truth” better than a “harmless lie” that could cause greater harm in the long run?

Or consider when the Second Law conflicts with the Third Law: Can a robot obey an order to carry out a dangerous task if it cannot survive long enough to complete that task? Is it possible to obey the order at all?

The Three Laws of Retirement?

When it comes to retirement planning, I see a parallel to the Three Laws of Robotics. If we boil down retirees’ objectives, it might make sense to categorize them into a similar trio of “Laws”:

  • First Law: A retirement strategy must generate sufficient reliable cash flow to meet spending goals.
  • Second Law: A retirement strategy must support flexibility and resilience, unless this would conflict with the First Law.
  • Third Law: A retirement strategy must maximize after-tax growth potential, unless this would conflict with the First or Second Law.

Like Asimov’s Laws, these retirement goals often conflict with one another, pulling us in different directions.

For instance, cash may be useful at preserving capital in the short term, but historically it has not been effective at maintaining purchasing power over time. For example, since 2007, the Bloomberg one- to three-month Treasury Bill Index's total return has trailed the Consumer Price Index by about 20%, according to Bloomberg data, even without accounting for potential taxes.

Similarly, stocks have been effective at growing wealth over long periods (the S&P 500 Index has grown by about 12% per year for the past 30 years, according to Bloomberg data), but they have also been extremely volatile—too volatile on their own—to generate a reliable stream of income for lifetime spending.

Annuities offer another example. They may provide a reliable stream of lifetime income; however, on their own, they have limited potential for long-term growth.The Liquidity. Longevity. Legacy. framework

It’s challenging to achieve all these objectives with a single asset or a static portfolio. However, it is possible to build a portfolio that balances these goals—and to adjust this balance as a family’s needs and priorities evolve—by using a framework, such as the Liquidity. Longevity. Legacy., that considers needs and goals over different timeframes.

The Liquidity. Longevity. Legacy. framework aims to strike this balance by segmenting wealth into three distinct strategies, using a family's priorities to build a customized portfolio that reflects the time horizon of each goal:

  • The Liquiditystrategy focuses on capital preservation, aiming to generate cash flow regardless of short-term market movements.
  • The Longevitystrategy prioritizes consistent growth and income, to help prevent the portfolio from being prematurely exhausted.
  • The Legacystrategy represents assets that exceed the family's lifetime spending needs. Free from the need to supply cash flow for near-term goals, these resources may be devoted to a portfolio that aims to maximize growth potential.

Just as Asimov’s robots had to balance competing priorities, successful retirement planning requires thoughtful trade-offs. The Liquidity. Longevity. Legacy. framework enables families to address conflicting objectives by assigning each goal its own strategy, reducing the need to compromise one priority for another.

This approach also allows portfolios to adjust as family needs change over time, often in ways that differ from conventional wisdom. For example, the traditional “glide path” recommends reducing stock exposure as retirees age to lower the risk of selling investments at a loss during market downturns.

While some de-risking may be prudent, especially early in retirement, it is possible to go too far. In many cases, allocating enough to a Liquidity strategy to cover three to five years of withdrawals is sufficient to weather most bear markets, as noted in the CIO research team's Bear market guidebook. 1

Beyond the Liquidity strategy, further de-risking may not align with a family's long-term goals. For example, if a growing portion of a family's assets is no longer needed for lifetime spending, it may be appropriate to move this excess wealth to the Legacy strategy, and investing them for long-term growth. This approach could result in an increasing allocation to stocks throughout retirement, contrasting with the typical glide path in a manner that may enhance the portfolio's overall growth potential—especially those assets earmarked for future generations. 2

By segmenting wealth, the Liquidity. Longevity. Legacy. framework may help families avoid sacrificing long-term growth for short-term security, or vice versa. Instead, each priority may be managed intentionally and adapted as circumstances evolve.

To learn more about the Liquidity. Longevity. Legacy. framework, reach out to a financial advisor who can help to apply these concepts to your family's unique circumstances.

_Time frames may vary. Strategies are subject to individual client goals, objectives and suitability._End notes 1 ۶Ƶ. (2024).
. ۶Ƶ Global Wealth Management. 2 ۶Ƶ. (2024).
. ۶Ƶ Global Wealth Management.

Important Information and Disclosures

About the Authors: The authors of this marketing document transitioned from CIO Research to Global Investment Management on 1 July 2025. This document constitutes sales and education content, not a research report, and it is not developed or held to the standards applicable to independent research.
Purpose of this document: This report is provided for informational and educational purposes only. It should be used solely for the purposes of discussion with your ۶Ƶ Financial Advisor and your independent consideration. ۶Ƶ does not intend this to be fiduciary or best interest investment advice or a recommendation that you take a particular course of action.
Personalized recommendations or advice:. If you would like more details about any of the information provided, or personalized recommendations or advice, please contact your ۶Ƶ Financial Advisor.
Conflicts of interest: ۶Ƶ Financial Services Inc. is in the business of establishing and maintaining investment accounts (including retirement accounts) and we will receive compensation from you in connection with investments that you make, as well as additional compensation from third parties whose investments we distribute. This presents a conflict of interest when we recommend that you move your assets to ۶Ƶ from another financial institution or employer retirement plan, and also when we make investment recommendations for assets you hold at, or purchase through, ۶Ƶ. For more information on how we are compensated by clients and third parties, conflicts of interest and investments available at ۶Ƶ please refer to the ‘Your relationship with ۶Ƶ’ booklet provided at ubs.com/relationshipwithubs, or ask your ۶Ƶ Financial Advisor for a copy.
Important information about brokerage and advisory services: As a firm providing wealth management services to clients, ۶Ƶ Financial Services Inc. offers investment advisory services in its capacity as an SEC-registered investment adviser and brokerage services in its capacity as an SEC-registered broker-dealer. 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 you understand the ways in which we conduct business and that you carefully read the agreements and disclosures that we provide about the products or services we offer. For more information, please review client relationship summary provided at ubs.com/relationshipsummary.
Important additional information applicable to retirement plan assets (including assets eligible for potential rollover, distribution or conversion): This information is provided for educational and discussion purposes and are not intended to be fiduciary or best interest investment advice or a recommendation that you take a particular course of action (including to roll out, distribute or transfer retirement plan assets to ۶Ƶ). ۶Ƶ does not intend (or agree) to act in a fiduciary capacity under ERISA or the Code when providing this educational information. Moreover, a ۶Ƶ recommendation as to the advisability of rolling assets out of a retirement plan is only valid when made in a written ۶Ƶ Rollover Recommendation Letter to you provided by your ۶Ƶ Financial Advisor after a review of detailed information that you provide about your plan and that includes the reasons the rollover is in your best interest. ۶Ƶ and your ۶Ƶ Financial Advisor do not provide rollover recommendations verbally.
With respect to plan assets eligible to be rolled over or distributed, you should review the IRA Rollover Guide ۶Ƶ provides at ubs.com/irainformation which outlines the many factors you should consider (including the management of fees and costs of your retirement plan investments) before making a decision to roll out of a retirement plan. Your ۶Ƶ Financial Advisor will provide a copy upon request.
No tax or legal advice: ۶Ƶ Financial Services Inc., its affiliates, and its employees do not provide tax or legal advice. You should consult with your personal tax and/or legal advisors regarding your particular situation.
Financial planning services: In providing financial planning services, we may act as a broker-dealer or investment adviser. When we act as investment adviser we charge a separate fee for the service and enter into a written agreement with you. The nature and scope of the services are detailed in the documents and reports provided to you as part of the service.

© ۶Ƶ 2025. The key symbol and ۶Ƶ are among the registered and unregistered trademarks of ۶Ƶ. All rights reserved. ۶Ƶ Financial Services Inc. is a subsidiary of ۶Ƶ AG. Member FINRA. Member SIPC.