A look into the future
Education, education, education. That was the resounding solution to result from a discussion on structured products as to what is needed to dispel the bad press that they have picked up over the years.
The products, whether correctly or not, have been labelled as both controversial and complicated in the past and come with somewhat of a ‘handle with care warning’. Being thrust into the limelight during the collapse of Lehman Brothers in 2008 did nothing to bolster the products credentials.
But that was four years ago and instead of dwelling on the past, perhaps we should start looking to the future.
With a series of educational roadshows for IFAs, regulators and the press alike, that is exactly what the Structured Products Association is aiming to achieve. Indeed, it can surely only make sense that the people selling the products understand what they are selling, those regulating them understand both their advantages and pitfalls, and journalists writing about them have a balanced view of what they are all about.
And as the seminar proved, there are plenty of positives about the products that can be passed on and learned by others, who may well then become structured product converts themselves. Rather than dwelling on any notion that the products are controversial, the panel sung their praises, highlighting the advantages of what they unanimously considered to be a solid investment choice. It is therefore important for the remaining critics to know that post-Lehman Brothers, the right products are being used in the right way by advisers in the right circumstances. The issues of the past are just that: in the past. And whatever you think of the products, the numbers tell their own story. Figures cited indicate that this is a growth market with £14bn worth of sales from structured products alone.
There is still room for improvement if the UK wants to catch up with other European markets as far as sales go, but it is up to the industry to demonstrate its worth – bringing education back to the fore. All too often products which could be consider just as, if not more risky, than structured products are swept off the shelves by those that think they are getting a good deal. So perhaps it is about time that structured products are stopped being used as something people can “hang a worrying coat on” and viewed on their own merits.
And as for those IFAs who want to be convinced of the benefits of structured products, they are calling for a more detailed analysis of how the products work from providers, so they can sift through this and pass it onto those clients that take a more analytical approach to their investments.
Amy Ellis is senior features writer for Financial Adviser