Liquidity rarely feels urgent until it suddenly becomes the only thing that matters — a reality that Toby Watson understands from direct experience of markets under stress.
Wealth management conversations tend to focus on returns, asset allocation, and market timing. Liquidity — the ability to access capital when needed, at a reasonable cost — receives far less attention, yet it underpins everything else. When liquidity is adequate, investors can be patient and opportunistic. When it is not, even well-constructed portfolios can unravel under pressure. Toby Watson, whose career placed him at the centre of some of the most significant liquidity events in modern financial history, brings a particularly grounded perspective to this often-overlooked dimension of portfolio management.
Toby Watson is a Partner at Rampart Capital, an independent London-based investment office providing bespoke investment management and advisory services to wealthy individuals and their families worldwide. Having spent nearly 17 years at Goldman Sachs working across structured credit trading, principal funding, and global infrastructure financing, Toby Watson developed a deep understanding of how liquidity behaves across different market conditions — including the severe dislocations of 2008, when liquidity evaporated across multiple asset classes simultaneously. He joined Rampart Capital in 2020 and also served as Chairman of Excalibur Academies Trust from 2018 until early 2026.
Toby Watson on the Liquidity Problem Most Investors Overlook
Ask most investors what they worry about and the answers tend to cluster around familiar concerns: market volatility, inflation, interest rate risk, geopolitical uncertainty. Liquidity rarely features prominently — until it does, at which point it tends to dominate everything else.
This asymmetry is not accidental. In normal market conditions, liquidity is largely invisible. Assets can be bought and sold at prices close to their quoted values, cash is available when needed, and the machinery of financial markets operates smoothly in the background. It is only when conditions deteriorate that liquidity reveals its true importance — and by then, the options for addressing a shortfall are typically both limited and expensive.
During Toby Watson’s time at Goldman Sachs, working across structured credit and principal funding, liquidity was not an abstract concept but a daily practical concern. The structured credit markets in which Toby Watson operated were characterised by instruments that could appear highly liquid in benign conditions and become effectively untradeable under stress. That experience shaped a view of liquidity that treats it not as a given but as something to be actively managed — particularly in private wealth portfolios, where individual circumstances can create liquidity needs that market conditions do not always accommodate.
Why is liquidity planning so often neglected in wealth management?
Liquidity planning tends to be neglected because its costs are visible, and its benefits are not — at least not until something goes wrong. Holding liquid assets typically means accepting lower returns than illiquid alternatives, and in a strong market environment that trade-off can feel unnecessary. What Toby Watson observed at Goldman Sachs, however, was that the cost of inadequate liquidity in a stress scenario almost always exceeds the cost of maintaining it — not just financially, but in terms of the strategic options it forecloses.
The Real Cost of Illiquidity
Illiquidity in a portfolio is not simply the inconvenience of not being able to sell an asset quickly. It has deeper consequences that are easy to underestimate when markets are functioning normally. Forced selling of liquid assets at depressed prices to meet short-term needs can permanently lock in losses that a patient investor could have avoided. Concentration risk increases over time as liquid assets are sold, and illiquid positions grow as a proportion of the portfolio. And perhaps most significantly, the inability to act during genuine market dislocations — when attractive assets become available at distressed prices — represents a real opportunity cost that rarely features in standard portfolio analysis.
These dynamics played out visibly during the 2008 financial crisis and, in different ways, during subsequent periods of market stress. Having worked at Goldman Sachs through some of those episodes, Toby Watson developed a clear-eyed appreciation of how quickly a liquidity problem can compound if it is not anticipated and managed proactively. The investors who fared best were not necessarily those with the most sophisticated strategies, but those who had maintained sufficient liquidity to remain in control of their own decision-making.
Building Liquidity Into Portfolio Construction
The practical implication of taking liquidity seriously is that it needs to be considered as an explicit dimension of portfolio construction — not something addressed after the fact. That means understanding not just the theoretical liquidity of individual assets, but how the liquidity profile of a portfolio as a whole behaves under different market conditions.
Toby Watson’s approach, informed by his career in structured finance, involves thinking about liquidity in layers. Some capital should be genuinely liquid at all times — available without significant cost or delay, regardless of market conditions. A second layer can tolerate some illiquidity in exchange for return, provided the time horizon and circumstances are appropriate. A third layer can be genuinely long-term and illiquid, but only if the investor’s situation is such that forced liquidation is not a realistic risk.
The qualities that characterise sound liquidity planning in a wealth management context include:
- A realistic assessment of the investor’s likely liquidity needs across different time horizons and scenarios
- Explicit stress-testing of the portfolio’s liquidity profile under adverse market conditions
- Avoidance of concentration in illiquid assets beyond what the investor’s circumstances genuinely support
- Regular reassessment of liquidity assumptions as both market conditions and personal circumstances evolve
Liquidity and the Broader Investment Framework
At Rampart Capital, where Toby Watson is a Partner, the investment process explicitly incorporates liquidity considerations into portfolio construction. The firm’s approach — which emphasises flexible portfolio structures and clear identification of desirable risks — reflects a view that liquidity is not a constraint to be worked around, but an asset to be managed deliberately.
That perspective draws directly on what Toby Watson built during his years at Goldman Sachs: an understanding that the ability to act — to hold through volatility, to sell when appropriate, and to buy when others cannot — is itself a source of investment value. Portfolios that preserve that optionality tend to perform better over full market cycles than those that sacrifice it in pursuit of higher short-term returns. For Toby Watson, liquidity planning is not a technical footnote to the main business of wealth management — it is one of the foundations on which everything else depends.
