As we approach the birth of RDR, independent advisers are preparing for a world where they will be required to offer a wide universe of solutions for their clients including structured investments..
I read with interest Defaqto’s recently published white paper called “Inside Structured Products”. Defaqto worked closely on the study with Investec and it has put together a useful analysis of the benefits and issues around investing in structured solutions. Their view, with a caveat on banks defaulting is that “advisers should be confident that providers of structured products have had to undergo a thorough examination of their structure and financial stability.”
Defaqto also produced some good research on fund and other platforms and I feel their insights in this area are worth highlighting. Especially the way platforms bring together a range of assets and tax efficient wrappers in one place. Enabling clients to invest in structured solutions directly or via an ISA or a pension. Hence, according to The Platforum, platforms hold over £200 billion of assets under advice+. Defaqto quote platforms like Ascentric, Avalon, Transact, James Hay, Novia, Nucleus, Praemium, Raymond Jame, 7IM, Sippcentre and Wealthtime as offering structured investments. They did not mention specialist platforms such as SPGO or SPWrap.
However, Defaqto highlight that structured investments are not available as widely as other retail investments. Missing from that list are platforms including Fidelity FundsNetwork and Skandia with their range of open ended protected funds. Also Cofunds, who are reported to be looking at linking up with a structured product platform. Yet, with RDR coming into force on 1st January the pressure to do so is increasing!
The challenge for truly independent advisers is: if you have clients who want exposure to UK equities with capital protection but your platform doesn’t offer that, how do you meet their needs and fulfill your obligations under RDR?