Time for financial advisers to embrace structured products by dandanhuanghuang


									11/11/2011                             Time for financial advisers to embrace structured products? | Money Man

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      Nei he fi a cia ad i e
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       he a fe         ea a d he ec      ha                                                                                S b i             c   e         M   e Ma age e
        ig ifica      h      i ce he g ba
      fi a cia c i i . H e e , he ca i a
           ec i   fea e ee          ha e
          iea       f a ea ,    i e Ja i e

      Times are changing. With the share
      market rollercoaster continuing to deliver
      clients a wild ride, financial advisers are
      increasingly facing up to the idea they
      may need to find a fresh path through the
      volatile new investment environment if
      they are to deliver the growth and capital
      protection clients want.

      Many are realising they are stuck on the
      horns of a dilemma – choose to play it
      safe until markets settle down, or accept
      things have changed and new strategies and tools are needed.

      To do that, financial advisers may need to get over their longstanding hesitancy over embracing the
      complexity of structured products.

      As Geoff Watkins, managing director of specialist consulting firm Path Independent, explains: “A typical
      adviser view of structured products is they are too complicated and they feel frustrated at the costs and
      lack of transparency.”

      He believes they need to overcome this view if they want to access the product solutions available to
      protect client investments.

      “Many advisers are critical and disinterested due to transparency concerns, but on the flipside, they are
      very interested in capital protection for clients. They want the protection, but this is hard to achieve without
      complexity,” Watkins argues.
                                                                                                                           ECEN COMMEN
      Standard & Poor s director fund services Rodney Lay agrees complexity is an issue with structured
                                                                                                                         "Scott, you seem to b e well informed on all financial
      products, but he believes it can be overcome.
                                                                                                                         matters. I am surprised that you missed this little
                                                                                                                         gem from the Sydney Morning Herald "
      “Structured products are generally not that complicated, but you need to understand them. Knowing your
                                                                                                                         David CFP QLD on US experts see sovereign wealth fund as
      product is essential in this area,” he says.
                                                                                                                         key for Australia

      Watkins believes the share market declines in the second half of the year may have been the final straw.
                                                                                                                         "As a b y-the-b y, it would actually make sense for
      “In the past two months, people have been very interested to talk to us – much more than in the previous
                                                                                                                         one aspect of the old agent/advisor system to come
      six months,” he says.
                                                                                                                         b ack into play. The ob vious move to "
                                                                                                                         Michael O'Hara on Regulatory change generating return to
      “Before that many financial planners seemed to be hoping there will be a return to business as usual, but
                                                                                                                         a tied-agency past
      the turmoil of August and September has seen some advisers decide they may need to start doing things
      differently. There is a shift in thinking by advisers to consider alternative investment tools, as they realise    "Some of the b est advice I ever received from my
      the old model may not be coming back.”                                                                             very wise old b oss was "Phillip it is not a matter of
                                                                                                                         cost, b ut rather a matter of "
      S          a e g     h                                                                                             Phillip Alexander on Pragmatic approach to reform
                                                                                                                         needed: Shorten
      Despite this new willingness to at least consider structured investments, the market still has some way to
      go.                                                                                                                "The experience in the United States is there will b e
                                                                                                                         two types of advisers. Those that represent the
      The March 2011 Investment Trends Capital Protected Products Report found in December 2010 there were               product and those that represent the "
      only 50,000 investors in structured products, which represented a modest rise from the 43,500 in November          Phillip Alexander on Regulatory change generating return
      2008.                                                                                                              to a tied-agency past

moneymanagement.com.au/          /time-for-financial-advisers-to-embrace-str                                                                                                        1/8
11/11/2011                              Time for financial advisers to embrace structured products? | Money Man
       The figures highlight the slow growth in the structured product market at the moment, according to Lay. “It        "Here is a clear example of how all advisers have
       is not a particularly vibrant market in Australia since the global financial crisis (GFC). We have seen less       b een wedged into having no opinion or
       resources being thrown at the sector since then.”                                                                  representation. The FPA represents the retail      "
                                                                                                                          CFPgraduate on Pragmatic approach to reform needed:
       This explains media reports that major investment banks such as Bank of America, Merrill Lynch, RBS and            Shorten
       UBS have experienced recent staff departures due to the reduced retail sales volumes in structured product
       since the GFC.                                                                                                     "Comments that denigrate and name individuals
                                                                                                                          instead of providing intelligent comment on the
       Watkins agrees interest is limited at the moment. “Actually there has been very little money going into            issues would b e b etter left unsub mitted. "
       structured products – or most investment products except term deposits – in the past six to 12 months,”            CFPgraduate on US experts see sovereign wealth fund as
       he says.                                                                                                           key for Australia

       “As far as flows go, there has been very little and in terms of size, the structured product market is             "The year long multi-million dollar Super review
       irrelevant compared to the rest of the investment market.”                                                         failed miserab ly as it did not define nor provide the
                                                                                                                          necessary safeguards in the "
       Lay believes the outlook will remain unchanged for some time. “Most people expect to see the market stay           Trevor on Pragmatic approach to reform needed: Shorten

       flat, as there is a very high degree of risk aversion at the moment. Financial advisers are reluctant to put
                                                                                                                          "Trailing commissions were indeed deferred selling
       money into structured products in such a risk-averse environment.”
                                                                                                                          (or setup) costs and not an ongoing fee for advice
                                                                                                                          as now perceived. The FPA has played "
       Who is interested?
                                                                                                                          CFPgraduate on Regulatory change generating return to a
                                                                                                                          tied-agency past
       Although there is limited information about Australian investors in structured products, what is available
       indicates investors have several main areas of interest.

       A recent paper by the Australian Securities and Investments Commission s chief economist, Alex Erskine,
       for the 2011 Australian Centre for Financial Studies Money and Finance Conference, gathered together
       some of the available data from the Investment Trends survey to create a portrait of structured product

       Erskine noted their median age was 56, they had a median income of $110,000 and a portfolio size of $1.2
       million. Most (60 per cent) were investing in their own name, with 32 per cent investing through self-               Amo n :
       managed super funds (SMSFs).                                                                                            1000

       The key factors triggering their initial investment were diversification (43 per cent) and capital guarantee (43
       per cent). Internal gearing was being used by 15 per cent of investors, while 17 per cent had gearing by the             AUD - Australia Dollar
       product provider.

       This data matches the experience of those working in the area, with capital protection products                          USD - United States Dollar
       representing the major growth area in structured products.
                                                                                                                              CON ERT
       As HSBC head of sales in global markets, Ian Collins, explains: “Products which maintain 100 per cent
       capital protection have seen a good pickup in interest from real investors, rather than investors interested in
       short-term products and trends.”                                                                                   All rates are advisory, and are intended to
                                                                                                                          provide general information about current
                                                                                                                          market conditions. Prior to booking a
       These real investors increasingly include SMSFs. “We are seeing more interest by SMSF investors as the             transaction, Western Union Business Solutions
       five-year timeframe suits their investment horizon,” he says.                                                      will advise you of the actual rate then
                                                                                                                          available for a particular currency transaction.

       Capital protection is the major attraction for the smaller balance investor. “The main focus on the 100 per
       cent capital protection is in the retail market, but less so at the wholesale level,” Watkins notes.

       “We have been promoting bespoke products for wholesale investors and we have seen further interest in
       this area. The move in that space is away from full capital protection to shorter duration products.”

       Capital protection was an important component in the SMSF structured products launched earlier this year
       by Deutsche Bank and Wilson HTM. These products were designed to provide upside to the S&P/ASX200
       and offered the choice of two strategies – 100 per cent principal protected or 85 per cent protected.

       According to Wilson HTM, the product was designed for SMSF investors who were keen to have a leverage
       exposure to the share market without the risk of margin calls.

       Collins believes there are two areas of interest when it comes to structured products. “The interest is in
       short-dated structured products with no capital protection, or in long-dated products with full protection.”

       The Erskine research paper also highlights the importance of diversification when it comes to structured
       products. According to Collins, this attribute is now more important to many investors than the gearing
       element that largely drove structured product use pre-GFC.

       He believes structured products can be used to provide diversification and assist with easy access into
       unfamiliar or inaccessible asset classes.

       “Where we see structured products as fitting into the portfolio is for investors with a long time horizon and
       who are seeking capital protection as a safe way to access an asset class that they may not be that
       familiar with, such as emerging markets or global equities,” Collins explains.

       There is also interest in other areas. “We are seeing a pickup in demand in the dual currency investment
       space and also in reverse convertibles due to current market conditions,” he says.

       Leverage loses popularit

      With only a small group structured product investors involved in gearing,
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11/11/2011                             Time for financial advisers to embrace structured products? | Money Man
      With only a small group of structured product investors involved in gearing, this represents a major change
      from a few years ago.

      “The big products pre-GFC were the loan products and those are now mostly no longer around,” Lay notes.

      Much of this is due to the fallout from the use of constant proportion portfolio insurance (CPPI) in structured
      products issued prior to the crisis. The cash-lock that occurred with many of these older products has led
      to the emergence of new volatility-targeted products.

      “Most loan products aren t in the market anymore as the environment is not as attractive as it was due to
      changes in the interest regime and equity market conditions,” Lay explains.

      “Structures that providers were using such as CPPI are not being used any more.”

      While leverage products are less popular, they have not disappeared entirely.

      According to Lay, some of the newer leverage products have the entire investment at risk and include a
      form of call option. The idea behind them is to put a small (1 per cent – 2 per cent) part of the portfolio into
      the product to achieve a much higher market exposure – often around 10 per cent.

      “These are very high risk products and the market needs to go up by a certain percentage to achieve a
      return,” he notes.

      Watkins agrees leverage products have reduced appeal. “There has been some interest in the Macquarie
      Flexi Trust-style geared and protected products, but they are June-type products,” he says.

      “The few products in the market are ticking along, but there is little hope of it getting back broad market
      interest for some time.”

      The growing use of structured products by SMSFs is also making the tax aspect less important, as this
      investor group is less focussed on tax, Watkins notes.

      Simple is best

      One of the main changes in the structured product market has been driven by financial adviser and client
      feedback for simpler, more understandable products.

      According to Collins, there is far less interest by investors in black box or complex products than in the
      past. “This view has been reinforced by the fact that complicated structures didn t perform as well in bear
      market conditions.”

      Lay agrees: “There has been a change to make them a little more palatable over the past two to three

      While newer structured products still consist of underlying assets and an additional structure over the top,
      there have been big changes made to the underlyings.

      “The underlying assets have been simplified since the GFC and now mainly offer a basket of equities or
      index exposure such as the ASX200 or S&P500 in the US and also basic exchange traded funds. They
      have been really simplified,” Lay explains.

      “The issuers are trying to make them as simple as they can so advisers will be interested and understand

      There has also been a strong trend towards shorter duration products. In the past, structured products
      tended to run for five-plus years, but most now have a duration of around three years.

      “We have seen a move towards shorter tenor or duration products. These tend to be riskier, but also offer a
      yield pickup,” Collins says.

      While innovation in the structured product space is limited at the moment, there are tailored products being

      “There is some bespoke product development being undertaken for some dealer groups, but these are
      small $20 million issues for a specific dealer group s client needs,” Lay says.

      Watkins agrees: “There are bits and pieces going on and some tailored products being developed. Some
      are likely to hit the market very soon for specific dealer groups.”

      However, when it comes to a wider rollout of these products, Watkins is uncertain. “The question is: will
      many funds and fund managers come out with them and will they have the resources to put behind them?
      There are difficulties in how to communicate them to clients and there are a lot of challenges in developing
      broad market appeal.”

      The current heightened regulatory concern about structured products is also likely to see some
      manufacturers pause.

      Protection for retirement sa ings

      One of the key areas where the popularity of structured products will grow is in providing protection for
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11/11/2011                              Time for financial advisers to embrace structured products? | Money Man
      One of the key areas where the popularity of structured products will grow is in providing protection for
      retirement savings.

      Structured products designed for this purpose such as OnePath s MoneyForLife, Challenger s Liquid
      Lifetime and Macquarie s Lifetime Income Guarantee have already found a niche.

      Lay believes there is a demand for retirement-linked products that provide “income certainty and increasing
      retirement income over time”.

      However, they have yet to achieve a significant market. “The retirement products are useful, but the uptake
      has been less than expected by the issuers, except for AXA North. North s popularity is due to the better
      protection it provides than CPPI, but the price is the cost of the capital protection. AXA North shows
      investors still want capital protection, especially in the pre-retirement phase,” Lay says.

      With a rapidly ageing population, more capital-protected products are expected to emerge.

      “There is a lot of work being done in the background on developing products delivering capital protection
      attached to the platform or super fund where the investor holds their assets,” Watkins notes.

      “Australians are not really keen on long-term income stream products, but they are looking at capital
      protection in the pre-retiree and retirement areas. Interest seems to be about finding solutions for retirement
      income strategies, rather than income streams,” he explains.

      Sol ing clien p oblem

      Despite the flat market, structured product experts remain convinced they have an important role to play.

      “Structured products do certain things and have specific profiles for specific investor groups. They appeal to
      certain investors and to investors at certain points in their investment lifecycle,” Lay explains.

      Collins agrees they can be very valuable in solving particular portfolio problems. “They can provide investors
      with access to income as well as capital growth. We are now structuring products that allow investors to
      take capital gains and income returns as well along the way.”

      According to Watkins, the key to successfully using structured vehicles is seeing them as a solution for
      achieving a client s objective, rather than as a product. He believes much of the early product development
      was manufacturer driven, rather than client focussed.

      “There are benefits from structured products as long as things are clearly explained and they serve a useful
      strategy purpose. Whatever the product, it shouldn t be the driver, the strategy should be. Advisers need to
      work out the strategy they need and then find a product that suits that or meets that need,” Watkins notes.

      In particular he believes structured products can be used to solve the tricky problems around poor
      investment market growth and capital protection.

      “Structured products address them by increasing returns, locking in gains in both rising and falling
      markets, and by limiting downside losses,” Watkins explains.

      To successfully use structured products, Lay says financial advisers need to understand the structure,
      payoff profile and performance of the vehicle in different market conditions. “They also need to match the
      product to the right client,” he notes.

      Collins agrees: “There is definitely a future for structured products, but you need to pick the right product for
      the right circumstances.”

      Both Collins and Watkins believe the Future of Financial Advice (FOFA) reforms will have an impact on the
      structured product market.

      “The future use of structured products is going to be a function of FOFA and how financial planners
      approach their business,” Collins says.

      “Advisers are maintaining the view that there is a role for them in a portfolio, but they are not sure yet how
      their remuneration model will fit in a post FOFA world.”


        Edi o ial: Ind           pe f nd ' ad e i ing on la gh 'incompa able'

        Re i emen Income : Financial ad ice and e i emen : a change in clima e

        Ne    in Foc     : Ind         pe f nd       mble on o he ec e of          cce

        In   ance: Helping o          clien   ih    a ma in     ance claim

        Toolbo : Ho      o       ok   i h he ne    SMSF collec ible     le

      Add a commen
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        Add a comment


                                                                Tagged with:
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                                                                Deutsche Bank, financial advisers, FOFA, HSBC,
                                                                Investment Trends, Janine Mace, Merrill Lynch,
                                                                OnePath, RBS, SMSFs, Standard & Poors, UBS,
                                                                Wilson HTM

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       COMMEN                                                                                       A DD A COMMEN
                                                                                                    A DD A COMMEN

        The landscape for investment advice is dangerous enough for the average
        consumer and their advisers! (You only have to look at the damage that can be had by product
        sellers with even the most basic APL + margin loans). It can only be GOOD news that advisers
        are avoiding structured products. There are no free lunches in investment markets and any
        product promising otherwise is exactly that, a free lunch for the product provider at the
        expense of the investor. Even the most sophisticated investors get shafted by structured
        product providers (just ask the counterparties expecting a payout on Greek CDS contracts!)
        How many advisers have seen the numbers behind the moneyfor life style products? The real
        numbers not the stylised graphs in the brochure? Pick up the Macquarie presentation and take
        note as they demonstrate the longevity risk of a 100% equities portfolio, then proceed to sell
        you a product to protect against this extreme risk that only allows circa 65% exposure to said
        equities??? There are very few advisers in the community that should be let loose with these
        products (yes they are products they are not 'strategies' despite how convincing the marketing
        presentation, sorry, education session is at your local PD day). By avoiding these products
        advisers are actually fulfilling an important role for their clients, that of a gatekeeper. True
        investment advisers protect clients not only from themselves but from investment business
        itself. Anything less diminishes your status as an adviser in favour of just another sales rep in
        the advice based distribution chain. It s a net positive for investors that advisers (or perhaps
        their compliance departments) are shunning these products.

        BB 31 October 2011 at 11:20

        I won't go near them....If you want capital protection stay out of the market. How many
        millions of dollars in investor and adviser money is being wasted in loan interest on an
        investment that was sold out to cash but is still locked in? These product issuers don't deserve
        any further fund inflows. They all failed miserably....yet still keep trying to convince
        themselves that there is a market for it and increased interest from advisers. Advisers and
        investors are going more back to basics than they ever did....transparent liquid tax effective
        dividends, nice and simple. If you can't handle volatility, that's what cash is for. Structured
        products are an invitation to the Financial Ombudsen where they use the "know your product"

        Gez 31 October 2011 at 13:37

        BB - I agree. I pity those clients that have certian maq "protected portfolios " with 100% lend
        that were not told of the provisions for margin calls once the portfolio dropped. Mr Maq calls
        client -" Mr Not so rich anymore , you know how your adviser sold you that protected portfolio"
        " Yes,actually I havent heard from him for a while" " Well actually its not really protected and
        we need 50K today or else we will sell you out and you take the loss" Protection my foot.
        Protected products are for lazy advisers that cant be stuffed having the hard conversations
        when the market is down, and that cant make thier clients look at long term - FGS put them in
        conservative investments instead if you are worried about the market. Its ok all my clents are
        protected - hey hang on the markets down 30% and they are being margin called - crap, I
        know I shouldnt have chased that up front......

        Tj from the south coast 31 October 2011 at 14:06

        @BB & @Gez correct. As I read these structured products when first launched, two things
        became apparent. First the issuer was going to make a tidy sum out of the gearing aspect with
        an interest rate that may or may not change over time. Secondly clients were locked into a 5+
        year term of investment with no guarantee of a return other than the capital, provided they
        stayed in the investment for the full term of the contract. Who invests money over that term
        without a return. For capital protection they may as well have left the dough in the bank.
        "Know your client" rule comes into play for these kind of products. Locking clients into a
        geared product without factoring in clients potential changed circumstances over a 5 year
        period such as loss of job, lower income, marriage/divorce, sickness or accident, increase
        debt from home purchase etc are just a few that could have dire impact on clients ability to
        maintain this kind of investment. Is it little wonder these kind of investments are more suited
        to product floggers rather than for the investor.
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11/11/2011                                 Time for financial advisers to embrace structured products? | Money Man
        to product floggers rather than for the investor.

        alleycat 1 November 2011 at 9:49

        BB, GEZ, Alleycat - so how are those managed funds going you've been putting all your clients
        into in recent years & earning a nice trail via the platform for doing nothing? I'm sure none of
        those clients are singing your praises at the moment for generating them such strong returns
        over the last 5 years. The fact is many investors cannot achieve their investment goals without
        some allocation to equity based investments. Many investors do not have lump sums of cash
        available to invest so structured products can provide 100% leverage with protection over their
        leveraged amount. This enables the investor to achieve a significant allocation to growth
        investments without tying up their own capital and without risk they will have to repay the
        loan from their own funds. Obviously the performance of these products over the last few
        years since the GFC hasn't been optimal, however neither has a direct exposure to similar
        investments. These products have not failed as you seem to suggest - they have performed
        exactly as they were designed to do. It is clear none of you have a strong understanding of
        why & how structured products should be used.

        GG 3 November 2011 at 13:05

        Thanks GG. your comments are straight from the marketing team i'm sure. I know exactly how
        geared structured products work, and i know how they have performed. Not really that great
        when the thresholds get triggered, is it? Effectively a margin call with no control. Then they
        buy back in after the market has rallied then sell you out again at next market dive....lol.
        How's that called capital protection? or those ones where the yield is reliant on a basket of
        securities...a few get hit, and all of a sudden your divvy is gone? I'm sure they work fine in a
        rampant bullmarket, and probably a good diversifier from betting on horses. I actually have a
        client stuck in one. Just 10% of the investment is apparantely illiquid...but we can't redeem the
        rest? and if we did, we get slugged a penalty anyway? Meanwhile she keeps paying the loan,
        and she got divorced, so it's a bit messy. Nah..stuff that...you can keep using them GG, but i'm

        Gez 3 November 2011 at 16:16

        GG some clients that had no protection and actually could afford to buy thier own shares or
        even take a 50% margin lend are ok too if they havent been forced to sell out as some that
        have had "protected portfolios " have.... why should they pay a higher MER, Interest to the
        product group, and have the uncertianty of setting off the recourse part of the loan? They
        have not performed how they were marketed. They have been marketed at 100% protection,
        however in the GFC many clients could not afford the interest rate and were shafted. How is
        that working? People are not stupid, we know we can protect equities ourselves through puts
        as I do for some of my clients, so why pay massive fees to do it and on top of that borrow
        100%? If i wouldnt do it I dont suggest it to my clients. If the clients are scared of the market I
        will allocate more fixed interest and cash.

        Tj from the south coast 3 November 2011 at 16:44

        Gez, I actually invested in a few structured products just prior to the GFC & they have actually
        performed better than my managed funds or share portfolio over the same period, because
        the CPPI thresholds got triggered. I was down only 5% when I redeemed while my share
        portfolio remains down more than 20% over the same period. I agree, some products that
        were frozen for redemptions & became illiquid did not perform as marketed but you can't just
        throw a blanket over all SP's and claim have no place. If you pulled your head out of the sand
        you might realise there have been some good enhancements since the GFC that address
        some of the cash-lock concerns (such as walk-away options) which make the products very
        attractive for the right types of investors. Why risk your own capital in this volatile
        environment when you can leverage with a small outlay, benefit from the tax deduction, and
        leave the majority of your own cash in a TD at no risk.

        GG 3 November 2011 at 17:24

        @ GG, there are structured products that have the potential of working in the investors favour,
        I doubt anyone with an understanding of investment markets would deny that, the issue is
        whether or not such products readily exist for retail investors and whether their use should be
        open season to your everyday adviser, given that very few are in a position to actually
        determine which products fall into the said category. The reality is that neither clients nor the
        majority of their advisers are in a position to properly assess the risk return tradeoffs. A full
        discussion on these products is well well beyond the scope of this discussion but your
        assertion that I don't understand the numbers could not be further from the truth! You are
        right, many of the products did EXACTLY what they are designed to do, they protected the
        capital and instead they are left with interest expenses to cover, fine that s ONE risk covered.
        But the primary issue remains, when you initially purchased this product what is the return
        linked to, what is required for you to actually generate a meaningful profit? and what is the
        probability of that actually occurring within the time frame of the said investment......... are
        you telling me the average adviser on the street can not only answer that with sufficient
        statistical rigor but can articulate it to a client so they can make an informed decision??? Not
        a hope in hell! One of the most common SP's around is a simple ASX call option (of course it
        is normally packaged and repackaged to make it seem much more exotic with all the costs
        that come with such a title!) A structured ASX call option, 100% financed at 10%+ pa in interest
        and ongoing costs for a term of 5 years or less…… and how is that pitched?? As an investment

        suitable for anyone with the income to cover interest, a lack of capital to invest and a
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11/11/2011                                Time for financial advisers to embrace structured products? | Money Man
        suitable for anyone with the income to cover interest, a lack of capital to invest and a
        disposition towards risk……… it's not an 'investment' it s a speculative punt on the PRICE
        movement of the ASX! Yet time after time adviser's trout out the old "the average long term
        return of the market is" line as the basis for the probability of success of such an
        'investment'?? How many ways in a single investment strategy can one demonstrate a total
        and utter lack of understanding for product, investment markets and statistics 101! This GG is
        why the use of structured products are just like firearms, selective usefulness in the right
        hands but downright deadly for anyone else. Oh and for the record, structured products paid
        great upfront and trail commissions to advisers, so you can leave that high horse in the stable.

        BB 3 November 2011 at 18:47

        "What is the return linked to?" simple answer BB is READ THE PDS....its not that hard. That's
        one of the reasons FP's have such a bad reputation. They're often lazy and don't follow the
        "know your product" rule. "What is the probability of a return within the timeframe of the said
        investment?" - how does that differ from any other investment you recommend? How do you
        articulate with absolute confidence that a share portfolio or managed fund or property
        investment is going to return x%? You mention the call option structures and how they are not
        an investment but a speculative punt on price return - once again isn't it the same thing when
        you invest in shares or managed funds or property - aren't you speculating that the investment
        will appreciate in price? Don't give me the yield answer as some of these structured products
        pay guaranteed distributions also. Your arguments are pretty lame and once again shows your
        complete lack of understanding of how SP's can be used.

        GG 4 November 2011 at 17:56

        Fantastic work GG, its hard to find a single sentence of your post that does not 100% reflect my
        last comments. 'How many ways in a single investment strategy can one demonstrate a total
        and utter lack of understanding for product, investment markets and statistics 101!' The whole
        context of my post was that these products should not be available to ordinary advisers, why?
        because they can't can't follow the know your product rule...... is that not almost exactly my
        point? You then go on to say the same thing as a rebuttal to my argument? Did I say that I
        could calculate with absolute confidence the return of an investment?? NO I said an
        assessment of the probability of potential positive returns? Of coarse rather than suggest that
        you do so you, simply change the subject. Then you go on to suggest that any kind of
        investment is essentially "a speculation on price appreciation anyway". Wow, I love a spirited
        debate just as much as the next person but thats only possible when the parties involved
        actually have a clue, you are my walking, talking case in point and no doubt yet another
        example of WHY advisers have such a bad reputation! And some gave you a licence to
        practice??? In any case my points are perfectly valid, all you demonstrated is that you can't
        grasp them and had no valid response to them.... (oh sorry you did, 'your lame') so on that
        note I will take some sage advice once given to me and end this conversation here: 'never
        argue with an idiot, they will simply bring the conversation down to their level and beat you
        with experience". I wish your clients the best of luck, by god they will need it.

        BB 6 November 2011 at 12:33

        GG, it would seem that each successive post of your just enhances the perception that you are
        in fact one of those 'lazy' advisers. Clearly the discussion has moved beyond the content of
        your marketing brochures and exposed your general understanding of investment concepts....
        which I might say is downright scary. Please quit now, you're not just embarrassing yourself,
        you're embarrassing all advisers.

        Aj 7 November 2011 at 11:16

        GG - Re read BBS post. He said in the right hands they were a good idea. But you must have
        missed that? We are saying that they are not meant for mainstream investors , thats all. GG -
        diversification is a must in these markets, a little bit of this and a little bit of that. Its not rocket
        science however you are trying to make it like that. Do you think if you said any of your post to
        a plumber that wanted an investment in a meeting in his lunch room with the rest of the boys
        he would understand anything you are saying? Thats the issue with you product guys, its the
        product first, not what the client understands or needs. GG you have some good points and
        seem quite smart , however clients dont want smarties that talk over thier heads, in fact they
        hate it.

        Tj from the south coast 7 November 2011 at 14:29

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