Laziness is behind IFA bias over structured products

The managing director of Lowes Financial Management said financial advisers who shunned structured products did so because they “did not want to bother learning” about how the investments actually work.

Mr Lowes added that structured products were as easy to understand as life assurance policies and could not be ignored because they were among “the best-performing investments of recent years”.

He said: “Advisers and commentators who dismiss the market as complicated and expensive have not done enough research to retain an independent title.

“Anything is complicated if you do not want to bother learning, but if you do not want to bother learning perhaps it is time to retire.”

According to Mr Lowes, too many advisers have made up their minds to no longer use structured products and have refused to change their stance, despite industry improvements and decent average returns in recent years.

Such attitudes, he added, went against the grain of delivering independent advice, as outlined in the FCA’s TR14/5 report, which stipulated that advisers operating as independent should consider “all types” of retail investment products.

Adviser view

David Smith, director of wealth management based in Bestinvest’s Newcastle-upon-Tyne office, agreed there was a lack of understanding. He said: “There is a big variance in adviser knowledge and structured products are often not used because advisers do not understand them.”