Almost a third of financial advisers want to understand which types of structured products work best in different scenarios, according to a survey carried out by StructuredProductReview.com.
This option was chosen by 32 per cent of 600 IFA respondents as the area they would most like to improve their knowledge in. The results surprised Ian Lowes, founder of the website, given the defined nature of returns produced in defined market circumstances.
“If you expect the market to rise moderately in the short-term, investing in an auto-call would be a worthwhile option to explore with their ability to mature with fixed returns on specified anniversaries.”
However, he added that if you are “reasonably confident” that markets will rise over the medium term, then a growth product may be an appropriate addition to a portfolio, given their potential to out-perform.
Nearly a quarter of IFAs did state that using structured products within a portfolio was where they would like to improve their understanding.
Mr Lowes said that combining a range of structured products, with different risk profiles and potential outcomes, can produce a better potential outcome by diversifying the level of market risk and counterparty exposure.
Understanding different payoff profiles was another structured product area that IFAs would like to improve their knowledge in, which should help them in the process of combining products in a portfolio.
Earlier this week the UK Structured Products Association introduced a new set of risk ratings to assist advisers in comparing products that match clients’ risk profiles more closely, following on from its product ‘codes’ series.
peter.walker@ft.com
