Liquidity is often an elusive goal in the wake of an economic downturn. As business owners and investors try to collect themselves in the wake of the COVID-19 pandemic, Greg Achten has found that many of his clients at UBS are in decent shape.
“They knew the bull market was getting older, and at some point, while nobody saw this coming, they knew there would be some type of disruption,” says Achten, managing director, branch manager at UBS in Chicago.
When or if things begin to settle down, it will be time to decide what to do with that liquidity.
“I think clients are wanting to take some action,” Achten says. “They are wanting to reposition. They are wanting to find ideas or wanting to make sure that they’re there in the right industries coming out of this.”
Smart Business Dealmakers spoke with Achten about the state of dealmaking moving forward. Here are some excerpts from that conversation.
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What is the mindset right now for investors in the wake of this economic crisis?
There’s a human element to it, so I think there’s going to be some reflection on life priorities. Do people think they need to work longer? Reflecting on life, do they focus on more simple priorities like family or philanthropy? Maybe instead of wanting to work longer, they want to work less.
So I think this one is truly different than 2008 because there’s the societal effect and not just the financial effect. It goes back to evaluating what’s important and what you’re trying to accomplish and then putting the numbers behind that to see where you are in those different areas.
If you’re someone who wants to be active, how do you find your way in the market?
Clients want to know how the downturn and the market volatility are affecting their plans. We went from a period where the markets went down so fast, clients were concerned and wanted to raise more money. But now that it has snapped back, clients are thinking, ‘Did I miss an opportunity to buy?’
What are some keys to building an effective strategy?
We help clients look at three phases. No. 1, the liquidity bucket. Do you have enough money in the short term to cover, to get through whatever volatility is out there in the next two to three years? Then we look at the longevity bucket, which is your long-term goals and your life plans and what you’re trying to accomplish over time. Frankly, that bucket needs to be evaluated right now. Typically, the leadership that comes out of a downturn is different. So it probably needs some re-evaluation and changes.
Then the third bucket is the legacy bucket. Once you’ve got the liquidity bucket and your longevity goals are met or covered in a plan, what is your wealth going to do for you long term? What’s it going to do even when you’re gone, frankly? What are your philanthropic needs? What charities do you want to cover? What do you want your wealth to do for your family? So I think the volatility really needs to be put in context around what you’re trying to accomplish for yourself.
