Where am I? 
Home Investment Structured Products
Categories: Structured Products
Topics: 121 Financial Services| UK| FSCS
Daniel Cawley, partner of 121 Financial Services, explains why, in his experience, structured deposits suit the majority of clients.
Sex, politics, religion and structured products are all topics that, in my experience, polarise opinion (between IFAs at least).
I have spent most of the past decade working in retail banking at a couple of the large UK retail banks. I have had the pleasure of working with many different clients ranging from those who did not have money to buy their next meal to those who have multiple millions. During this time I was not a bancassurance adviser so I was mainly dealing with people who did not invest their money.
My overwhelming experience is that the majority of the people I have dealt with are not willing to risk their capital. I know there is risk to capital in bank and building society accounts due to inflation but, at the end of the day, “Joe Public” wants his £50,000 to still show as £50,000 in X years time. However, again my overwhelming experience is that the majority of people are greedy and want to get the highest rate of return they can, regardless of whether they need it, which is why price comparison sites are so popular. Joe Public can easily go online and look at the best bond/cash ISA/savings account rates and shop around for the best deal.
This is where simple structured deposits come into their own. Clients who want a capital guarantee but want the potential to get a better return than that offered by the high street banks/building societies. A good, simple structured deposit with a strong counterparty with full FSCS cover may not set the world alight with high double digit returns but they are perfect for certain customers.
Don’t get me wrong, I like the full range of structured products and would be happy to advise clients on SCARPS as well as structured deposits, however I find that if a client is willing to look at putting their capital at risk there are often other more suitable alternatives.
| Share | |
| Comment | Why structured products are suitable for most clients |
More from professional adviser
Email alerts
Recommended reading
Categories
Topics
Comments
Re Missold Investments comment
Re: "Is it not possible to invest in an index-linked structured deposit, and lose your money if the index does not perform?" Not to my knowledge. Ian
Posted by: Ian Lowes
Structured Deposits and SCARPS
Structured Deposits and SCARPS are mutually exclusive in the sense that a structured deposit is a bank deposit and as such you can not get back less than you put in (subject to FSCS protection paying out in the event of bankruptcy of the bank). In relation to SCARPS, the way I look at it, would I generally prefer to invest into a long only fund where the index needs to go up 8% a year for me to be happy whilst I take all the downside,or would I prefer something like a kickout where I can get that same return even if the index is flat? As an extra benefit, I typically get a 50% capital protection buffer on the downside. Makes sense to me.
Posted by: Ben Murison (SPGO)
Related articles
Most Read
Audio / Visual
With the industry's biggest fund managers, IFAonline welcomes you to the media centre.
This year we have 14 awards designed to mark out the very best products in a highly competitive and innovative market. This includes three new awards for 2011 to reflect the developments in this rapidly growing market: Best Dual/Multi-Index Product, Best Structured (Oeic) Fund and Best Structured Product Provider.
Events
Poll
|
|
Job search
Ifaonlinejobs will open the right investment career path for you. Search hundreds of vacancies on www.ifaonlinejobs.co.uk now
In Focus
After 12 qualifying rounds in which 640 IFAs competed for a place in the final of The Investec...
Viewpoints
Watch Gary Dale and Lawrence Gosling discuss where structured investments could and should...
sponsored by
Not mutually exclusive
Perhaps it is the way I read it, but the article seems to imply that SCARPS and Structured Deposits are mutually exclusive. This is wrong, surely? Is it not possible to invest in an index-linked structured deposit, and lose your money if the index does not perform? 'SCARP vs Capital Protected' is about whether returns are linked to performance of eg a stock market index. Structured Deposit vs. Structured Investment Product is about the mechanism used for delivering protection of capital.
Posted by: MIssold Investments