Personally..

...yes If a firm doesn't understand it and the adviser wouldn't buy it then why would it form part of a 'portfolio'? Over the last 25 years I have seen every conceivable permutation of a 'structured product' and after 1998 or so rarely found a product which would fit any 'square' or 'round' cubbyhole or meet any of my clients' needs or expectations. In my ever so 'umble opinion the root of the problem is where the supposed 'guarantee' lies, who backs it up, what instrument provides adequate reassurance. These are not simple products, they are often as toxic as with 'profits', some may ask what 'profits'. But what do I know? I am a 'sheep chaser' in Snowdonia.

Posted by: Evan Owen

Less than credible comment from more than credible commentators ...

When it comes to structured investments, the extent of less than credible comment made by more than credible commentators continues to amaze me. I certainly include Danny and his colleagues in the more than credible commentator camp – Evan I’ll get to you in a minute - but NOT when it comes to structured products, where the information provided by HL to their clients, including via the HL newsletter article that Danny wrote recently, that is referred to in the above piece, is anything but the ‘best information’ that HL prides and markets itself upon. Differentiation is everything : and comparing a tracker to a capital protected structured product offering 50% participation, and using this comparison as the basis for castigating all structured products, is clearly nonsense : and makes a nonsense of an independent financial advisers’ responsibility to identify value adding investments on behalf of their clients. By all means shame and shun structured products offering 50% participation Danny – I’ll be the first to stand by your side agreeing with you that they would represent an awful investment for any investor, bank or IFA advised - but using a worst case example as the basis for not seeking the best is woeful ... and is beneath HL’s capabilities. HL spends all day long screening 2000 mutual funds down to a list of just 150 ‘preferred’ funds : that is less than 10% of the available universe, but the raft of ‘dog funds’, closet trackers, hit and miss duds doesn’t stop you deploying time, resource and intellect to identify the ‘best of breed’ minority that can add value for investors. It’s not difficult to see that you – and all advisers - could and should be doing the same when it comes to structured investments : where, just as with mutual funds, quite clearly all providers, processes and products are NOT the same. Providing what is blatantly misleading information, ie sweeping statements premised upon worst case examples and outdated bunkum, is surely the ‘worst type of information’, not the best. Or, should I look forward to one day reading HL’s assessment of Jayesh Manek’s performance : and why this means HL has decided to remove Neil Wooddford’s funds from its preferred funds list?! Evan : ‘‘If a firm doesn't understand it ....’’ surely you’d agree they should gain the knowledge needed to ensure they do : this is a £45m-50bln industry we’re talking about here. I won’t go on – but I will send you a line with some examples of 'permutations’ that you would appear not to have seen in your 25 years. In summary, to my mind, with reference to my comment title and starting point, there are many reasons why some more than credible commentators make less than credible comments about structured investments today. One reason is ignorance – which is inexcusable : independent advisers are surely duty bound to ensure they have adequate knowledge of the full universe of investment options and consider all of them without restriction. Another reason is that more than credible commentators pander to trade and national publications/journalists appetites for ‘bad news/stories that make good press’. Duff structured product stories empathise with some journalists misguided and outdated views of structured products : and feeding them continuing ‘bad news’ sagas is easier than trying to educate them about ‘best of breed’ structured investments and how they can be intelligently used : frankly that won’t garner so many column inches. All that said, I am hopeful – in fact, confident – that over time, and I think a relatively short space of time, the tide will turn and the facts will rise to the surface. They are irrefutable : intelligent advice can and does include making use of ‘best of breed’ structured investments, which can and do add value for investors, in balanced and diversified portfolios. Client-centric wealth managers and investment advisers therefore need to get up to speed, if they’re not, to ensure they understand the sector and are able to differentiate within it, to avoid the duff stuff : no-one’s saying all structured products are virtuous : as per mutual funds and wealth managers/financial advisers themselves.

Posted by: Chris Taylor, Managaing Director, Incapital Europe

Evidence...

A quick look at the Recent Maturities section of StructuredProductReview.com shows that those who dismiss these investments out of hand have been doing their clients a disservice.

Posted by: Thomas Hughes