Looking past uncertainties in Russia, the U.S. and China to capitalize on broader growth

For investors, uncertainty can be a strong impetus to retreat to perceived “safe havens.” However, in today’s financial markets, there’s no longer such a thing as true “safe havens.” Moreover, if investors are able to look past these uncertain events in a broader context, they will see significant long-term opportunities, according to the Chief Investment Office Wealth Management Research (CIO WMR) in the latest UBS House View: Investing through uncertainty.

Russia and Crimea—where uncertainty can yield opportunity

While recent volatility of events in the Ukraine region has the potential for devastating effects on energy supply and demand in the area, and the broader Eurozone economy, CIO WMR believes that significant escalation in this conflict is unlikely, given the strong mutual dependence on oil and gas commerce between the West and Russia. One long-term opportunity that could emerge for investors is in Russian equities, which are trading more than 10% lower in March than in February 2014. CIO WMR believes the strongest near-term opportunities, however, are in reducing holdings in traditional “safe havens” such as the Swiss franc, Japanese yen and high-grade bonds.

Watch video here by The Lexington Group Tokyo New York Asia Financial Services

U.S.—fundamentals remain strong amid lack of clarity

While it’s expected that the Fed’s tapering measures will continue, more uncertain is the potential rise of interest rates. This would be negative for the bond market but positive for the U.S. dollar. Nevertheless, the impact on equities and the broader economy would be more nuanced due to the overall strength of the U.S. economy, particularly because of the forces driving energy independence in North America. Between 2007 and 2013, employment in U.S. oil and gas rose 40% with many U.S.-based manufacturing executives considering reshoring production to the United States. CIO WMR, therefore, recommends U.S. equities and credit in capitalizing on this growth as well as the U.S. dollar on the currency front.

China—gradual embrace of the free market offsets fears of slower growth

While China’s rapid rise to the second largest economy in the world has been nothing short of remarkable, the drivers of its growth today are somewhat in question. For now, China appears to be countering these measures not through actions by the state but through more openness to market-driven forces. For instance, CIO WMR believes while there is considerable uncertainty in resources in heavy industry, the liberalization of capital markets and energy prices should benefit brokerages and companies helping to improve energy efficiency.

CIO WMR also believes that future technological development holds significant opportunities for investors with improvements in mobile technology and advancement in robotics continuing to impact labor productivity and efficiency, as well as contributing .5%-.7% to global growth over the next decade.

To understand more about how these trends may impact your individual investments and strategy for the year, connect with your UBS Financial Advisor or find a UBS Financial Advisor.

Related Links:

Stretch IRA strategy

Understanding annuities

Wealth Planning Insights


The Lexington Group Tokyo New York Asia Financial Services: Think you know the Next Gen investor? Think again.

Lazy. Entitled. Narcissistic. Spendthrifts. Digitally obsessed. Google the term “Millennial” (ages 21-36), and these are some of the words you will find to describe this generation. But our research of over 1,000 Millennials shatters those stereotypes. We see investors who are extremely conservative, savers not investors, and not nearly as self-directed as one would expect. And they worry about their parents’ financial health and futures as much as they worry about their own.

Millennials’ attitudes about money, risk and success have been shaped by two unprecedented phenomena: (1) access to lightning-fast technology innovation and (2) dramatic economic and market volatility that constrained their job prospects and earning abilities, as well as disrupted their parents’ real estate values, investment portfolios and retirement savings.

The Next Gen investor is markedly conservative, more like the WWII generation who came of age during the Great Depression and are in retirement. This translates into their attitude toward the market as we see Millennials, including those with higher net worth, holding significantly more cash than any other generation. They fully buy into the redefinition of risk as permanent loss, an investor insight we observed in the 2Q 2013 edition of UBS Investor Watch. And while optimistic about their abilities to achieve goals and their financial futures, Millennials seem somewhat skeptical about long-term investing as the way to get there.

When it comes to achieving success and financial stability, Millennials are as worried about their parents as their parents are about them. As a result of seeing their parents’ retirement and investing plans disrupted by market volatility, Millennials put concerns about their parents’ financial stability near the top of the list of worries. In turn, parents of Millennials worry that their children will have a harder time achieving financial stability and success, and feel they must provide help along the way.

Millennials are realistic about needing advice when it comes to meeting their financial goals. Surprisingly, when making a financial decision, Millenials are no more self-directed than other generations. Rather than relying exclusively on socail media and online sources, Millennials tell us that they look fot face-to-face advoce from people they trust, and who lsten to them—paricularlu famili or a family-referred profesional.

Stretch IRA strategy: The Lexington Group Tokyo New York Asia Financial Services

The “stretch IRA” is not a type of IRA; it’s a wealth-transfer strategy. If you don’t anticipate needing all of your IRA assets to provide income in retirement, you may be able to stretch your IRA assets to benefit your spouse, children and grandchildren.

The stretch strategy begins with your UBS IRA. It is important to work with your Financial Advisor to properly designate your beneficiaries and ensure they understand how the stretch IRA strategy works.

The benefits of stretching your IRA

– Throughout the life of the IRA, you and your beneficiaries will enjoy the benefits of tax-deferred growth on the assets.

– You and your beneficiaries have the opportunity to receive an income stream over the longest allowable period until the IRA assets are eventually exhausted.

– If beneficiary designations are properly set up, your IRA passes directly to your heirs, giving them access to that money without potential time delays and fees.

Related Article: Millennials Are as Financially Conservative

How it works

Once you reach age 70½, you are required to withdraw annual required minimum distributions (RMDs) from your traditional IRAs. The amount of your RMDs is based on two factors: your IRA account value and your life expectancy. Since both factors change every year, so will the amount you are required to distribute. The IRA begins to be “stretched” when it passes to your primary beneficiary upon your death. In most cases, a younger spouse can roll your IRA over to their own IRA to “reset” the RMD formula to reflect his or her longer life expectancy—thus “stretching” out the RMDs over more years. The same concept works as the second generation inherits your spouse’s IRA—the next beneficiary may also “reset” the RMD amounts to his or her own life expectancy, and “stretch” the period of distributions. The third generation cannot “reset” the RMDs to their own life expectancy, but they will benefit from the years of tax-deferred growth of the assets and will receive the distributions until the account is depleted.

Stretching a Roth IRA    

The stretch IRA strategy also works with a Roth IRA. Since RMDs are not required from a Roth IRA during your lifetime, you pass your entire Roth IRA to your heirs who can generally take tax-free distributions from the account over their life expectancy. Contact us to discuss beneficiary planning and how you and your family can benefit from the stretch IRA strategy.

The Lexington Group: Education Savings Accounts—529s and Coverdells

Tokyo New York Asia Financial Services – With college costs on the rise, financing a child’s higher education can be a challenge. There are two types of education savings accounts that are specifically designed to help parents, grandparents and others save for a child’s educational expenses on a tax-advantaged basis.

Both 529 plans and Coverdell Education Savings Accounts (CESAs) permit after-tax contributions that grow tax-free until distributed. With both, distributions used towards the qualified education expenses of the beneficiary at an eligible educational institution are free from federal and in most cases, state income taxes. Unlike other vehicles used for education savings such as UGMA/UTMA accounts, with both 529s and CESAs, you control the account including who is beneficiary and changing the beneficiary, how much to contribute, and when and how much to distribute. You can also choose to make contributions to both a 529 and a CESA on behalf of the same beneficiary during the same tax year.

An important factor to understand about 529 plans is that they are sponsored by individual states. The states determine the maximum contributions, eligible investments and state tax advantages for their programs. Therefore, state plans vary greatly in their tax benefits, investment options, costs and features. By contrast, CESAs work more like IRAs in that you can choose any investment options available through the financial institution you choose to serve as your CESA custodian or trustee. Residents are not required to invest in their own state’s 529 plan, and distributions do not need to be used to pay for schools only within the contributor’s or beneficiary’s state of residence. In addition, individuals may contribute to more than one state’s 529 plan.The chart below compares the important features of these two types of education savings accounts:

Making significant gifts to a 529

529s have a special feature known as accelerated gifting. Instead of just gifting $13,000 per beneficiary per year using the annual exclusion, you may contribute five years of gifts in the first year for a total of $65,000 per individual (or $130,000 for married couples filing jointly) without paying gift tax. This also removes this money from your estate. Taking advantage of this option allows you to make significant contributions early and benefit from the tax-deferred growth within the 529 account.

Let’s talk about it

The best way to prepare for education expenses is to become familiar with your savings options and determine how each can address your specific needs. Give us a call today to discuss 529s, CESAs and other education savings alternatives in light of your current goals, objectives and financial situation.

The Lexington Group Tokyo New York Asia Financial Services

We are a professional and focused five-person team with a century of combined experience in the financial services industry. We strive to deliver world-class service to our clients. Our premier team emphasizes integrity, trust and service by placing an unconditional focus on the client as well as his or her needs. We leverage the global breadth and depth of UBS while maintaining the heart and soul of a two-person organization. Exceptional service for discerning investors – We are The Lexington Group.

Advice. Beyond investing

In today’s economy, good financial advice has never been more critical. That’s why it’s so important to partner with a team of dedicated Financial Advisors who are committed to listening to you, understanding your concerns and helping ensure all aspects of your financial life are aligned. We’ll strive to be your personal advocates and provide you with advice that is tailored to your unique circumstances and all you’d like your wealth to achieve. We look forward to helping you embrace your financial future with confidence.


The confidence to pursue all your life’s goals starts with a plan.

Planning is the road map for the financial future you envision. It’s the first step in our ongoing conversation with you to develop a clear, actionable and flexible plan based on your needs.

Whether you’re looking to save more intelligently, access your money more efficiently or borrow more strategically, a comprehensive financial plan from your UBS Financial Advisor will give you more confidence in your ability to meet your goals over time.

Only about one-third of Americans have a financial plan.

Talk to your UBS Financial Advisor today about the importance of having one or click an area below to explore solutions that help address your entire financial life.


It’s more than what your assets do. It’s what you can do with them.

The way you access your funds and manage your cash flow each day can have a tremendous impact on your long-term financial goals. From earning competitive rates through the automatic overnight sweep of your available cash to enjoying valuable credit card rewards, UBS has intelligent and integrated ways to maximize the efficiency of your hard-earned dollars.


One eye on today. One eye on tomorrow. That’s the coordination and focus a healthy financial life requires—and exactly why having a financial plan is so important. Particularly when you tackle two of the most significant financial challenges anyone will face: paying for rising college costs and securing a comfortable retirement that may last three decades or more.


Borrowing with a vision for your future. Your UBS Financial Advisor can help you implement solutions to fit your needs.

The assets you own are only one part of your financial life. What you borrow—and more importantly, how you borrow—play a critical role as well. Seeing how assets and liabilities interact to impact your financial life helps you understand which lending options are right for you when buying or refinancing a home or seeking funding for personal and business needs.


Professional advice helps you capture the right opportunities for your financial goals.

Market opportunities are endless. But it takes an investment strategy informed by a thoughtful financial plan and the advice of your UBS Financial Advisor to understand which opportunities are right for you, and when. Working together, you’ll build a growth strategy that relies on discipline and insight to maintain focus in any investment climate.


A lifetime of work must never be left to chance.

Like most highly successful people, you know the value of being thorough and diligent in everything you approach. This includes preparing for the unexpected.

You and your UBS Financial Advisor can account for many of the risks you face—prolonged illness, sudden death, unexpected downturns in the market and much more. Doing so is one of the most important ways to ensure you, your family and your wealth are protected.


Preserving a legacy of everything that’s important to you.

Estate planning is a key element of any financial plan, ensuring the preservation of both assets and values for future generations. Your UBS Financial Advisor understands this, working with dedicated estate planning experts to help you design an estate plan that cares for your loved ones, honors your wishes and preserves your legacy for years to come.