Your Industry  

Guide to Structured Products

    CPD
    Approx.60min

    Introduction

    With structured products returns defined at outset an investor is able to calculate exactly what their return will be for any given movement in the reference asset.

    This relative certainty as to what can happen can allow, with effective financial planning, for future financial requirements, such as school fees or pension drawdown, to be met.

    But one concern about structured products is counterparty risk.

    Most structured investment products will be structured as a loan to a major financial institution.

    What happens if that backer goes bust, like Lehman Brothers or Keydata did?

    Advisers and investors must be aware that unlike deposit based products, structured investment plans do not benefit from Financial Services Compensation Scheme cover if the financial institution acting as counterparty goes bankrupt.

    Therefore it is of paramount importance that investors understand the risks of placing their money with the issuing institution and counterparty.

    This guide will explain the different types of structured products, pros and cons of these investments, the regulator’s view of these deals, what happens if the backer goes bust and the tax implications for investors.

    The contributors to this guide are Adrian Neave, managing director of Gilliat Financial Solutions; Ian Lowes, founder of StructuredProductReview.com; and Graham Devile, managing director of Meteor Asset Management.

    In this guide

    CPD
    Approx.60min

    Please answer the six multiple choice questions below in order to bank your CPD. Multiple attempts are available until all questions are correctly answered.

    1. What is the most prevalent type of structured product available in the market, according to Mr Lowes?

    2. Are structured products illiquid, according to Mr Devile?

    3. Which of the following is NOT a type of protection put in place with structured products, according to Mr Neave?

    4. With a leveraged put with a barrier at 50 per cent, how much capital would be lost if the asset ended down 60 per cent?

    5. How did Martin Wheatley, chief executive of the FCA, describe exotic structured products?

    6. What is one of the biggest issues the structured product industry faces, according to Mr Neave?

    Nearly There…

    You have successfully answered all the questions correctly, well done!

    I completed this CPD in

    To bank your CPD please complete the form below.

    Were the stated learning objectives met?

    Why weren't they met?

    What did you learn from undertaking this CPD exercise?

    Why did you undertake this piece of learning?

    Any comments about this article or FTAdviser's CPD in general?

    Banked!

    Congratulations, you have successfully completed and banked this piece of CPD

    Already Banked!

    You have already banked for this article.

    To bank your CPD you must sign in or

    Register

    One or more questions have been incorrectly answered,
 please review your answers and try again.

    Please complete all the above text fields to bank your CPD.

    More Your Industry CPDSee my completed CPDSee all CPD