New Structured Product Plans and Providers are available, although you will notice that a number of Plan Managers/Providers are increasingly requiring their plans to be purchased, having received regulated financial advice.
The Plan Managers’ increasing requirement for financial advice to have been sought prior to the purchase of a contract-based investment is intended to produce ‘suitable investment outcomes’ for investors and is driven by the view of the Counterparty, along with the Plan Manager.
BestPricefs is a Regulated Independent Financial Advice business that can provide advice as requested by consumers and also enables a number of products and plans (investment and protection products) to be purchased without seeking advice.
BestPricefs do not stipulate which products require advice – we are constrained by the Plan Manager/Provider, who dictate the method and compliance requirements for plan distribution.
We fully recognise that consumers require choice over products/plans and services, so we endeavour to offer as wide a selection as possible to consumers of financial products and those requiring advice across the UK.
It is essential non-advised consumers fully understand that they do not benefit from the protection provided by the Financial Ombudsman Service (FOS) in the event of a product purchased being ‘unsuitable’ to meet the needs of the purchaser.
Financial Advice holds the ‘Adviser’ accountable for the ‘suitability’ of the product meeting the needs of the consumer. This does not guarantee performance or protect consumers against losses, it does however provide the consumer/client with meaningful information, ensuring the solution recommended meets the stated objectives of the consumer. A ‘Know your Customer’ process must be undertaken prior to regulated financial advice being concluded, which takes time, skill and experience.
(If you have any questions about ‘advice’ or what level of protection ‘advice’ provides, simply get in touch so we can explain in detail).
No doubt you will have also noticed that a definitive move towards 7, 8 and often 10-year Structured Products is taking place, in contrast with what was normally 6 years duration as a maximum term, which dominated the sector for so long.
There are two clear motivations for the change in plan construction:
1. Opportunities
Structured Products/Investment are conditional by nature. Increasing the term of a product enables the product to gather more opportunity to meet the relevant conditions and contractual terms. Recognising the benefits to an investor, there are also pitfalls to identify also.
Cons
- If the linked asset(s) are downward trending the product will have longer to fall progressively deeper in value.
- If the pre-specified investment conditions aren’t met, investors’ money is locked into non-productive sources, resulting in an opportunity cost.
Pros
- Generally higher potential rate of ‘contract return’ offered.
- A longer investment opportunity available to meet investment conditions.
- A greater length of time available to recover from adverse investment markets mid-term.
2. Rate of Contract Return
As the long term generally delivers more than the shorter term, investors are somewhat increasingly compensated for accepting longer term exposure. Derivative like options are more expensive at longer term because they contain a greater time value.
In a Structured Product these are sold at a premium, where the result is often to increase the headline ‘contract rate of return’.
As Plan Managers increasingly extend investment terms, it will be imperative that investors/purchasers are aware and prepared to accept additional ‘Risks’ as well as potential reward headlines.
At BestPricefs we are certainly best placed to provide exceptional value for money for both non-advised consumption and ‘advised services’ – we challenge all consumers to obtain better ‘best price advice’ for the products that require regulated financial advice. (Advice must be conducted via written communication where a financial ‘fact find’ and risk profiler is gathered, stating what an investor’s specific needs and goals are. We send out the required paperwork electronically only). The price for this service is 1.5% of the investment value, subject to a minimum price of £300. This fee is payable to receive the advice, not relying on the investment to take place.
We at BestPricefs are busy building a Funds solution with leading providers, which will focus on risk objectives and will be market leading on cost and quality.
The proposition will no doubt disturb the market in what is seen as ‘normal’ in respect of cost and quality outcomes via a risk managed process.
Watch this space… the solution will be Advised only…. Consumers will be required to take advice in order to gain access to the investment solutions.