LFM launches structured investment ‘hub’

Newcastle-based independent advisory firm Lowes Financial Management (LFM) has launched Lowes Structured Investment Centre (LSIC), a new initiative in the UK structured investment market.

LSIC has been conceived to provide a collaborative structured investment ‘hub’, designed to help drive a range of new investments in co-operation with issuers and providers, with the aim of broadening and advancing the sector’s products and service offering to UK advisers and other intermediaries.

The centre is the result of reviewing everything that Lowes Group has been doing with structured products in its long history of selecting them for its own clients and engaging with the sector to provide services for other advisers in the UK, according to Chris Taylor (pictured), head of strategic development at LSIC adding that it also follows on from the most recent Thematic Review and the additional guidance and expectations and challenges, as well as opportunities, that this creates for the sector.

“The aim with the centre is to create a hub that can help drive product cooperation with issuers and providers, working together on product conception, development and distribution,” said Taylor. “The aim is to help extend the product ranges with providers, with ideas that may be originated from either ourselves or the issuers/providers. In addition to working with the sector’s existing providers we are also in discussions with a number of potentially new entrants to the sector, firms that are looking to enter the market but may need or benefit from assistance around product development and distribution.”

Live from 8th September, LSIC will launch its first product co-operation tomorrow in the form of the first 10-year structure based on a kick-out payoff strategy which has been developed in co-operation with independent provider Mariana Capital, which will split fees charged on the new product with LFM, and investment bank Societe Generale. The fees are not expected to exceed 3.5% over a 10-year term and will be capped at £15,000. LFM’s share of the product fee on any product recommended by a LFM adviser will be donated to the Charities Aid Foundation, an independent charity that provides products and services to other UK charities.

“The first investment proposition will be unveiled immediately – and is the result of a long look at and think about kick-out autocalls and what they are designed to do, which, fundamentally, is to generate positive annualized returns on the first anniversary where market conditions make that possible,” said Taylor. “As will be seen when product details are revealed, we have broken new ground in helping develop a structure with an extended investment term, in order to maximise the opportunities for successful returns to be generated whilst also repositioning investors’ exposure to market risk.”

The centre, said Taylor, builds on the recognised experience and expertise in structured investments of LFM to engage with the sector and “select leading products on merit and suitability grounds, whilst also identifying those products that it feels investors should avoid”.

With more than £600m in funds under advice, including 15% in structured investments, the new centre, in connection with the firm’s portal which includes a selection of structured products sold in the UK market via independent advisers, will include opening up access to specialist tools developed by LFM in connection with its own use of structured investments with its clients, such as product monitoring and client portfolio management software system SP-Perspective.

Structured investments only make up about 15% of the firm’s total assets under advice, but we certainly like them – and for plenty of good reasons, said Ian Lowes, managing director of LFM in a statement. “We have used them consistently within portfolios for the downside market protection they offer and the defined investment returns that they can and do generate,” said Lowes. “The performance of the products created for, and distributed in the IFA sector has, with very few exceptions, been excellent.’’

LSIC, said Lowes, is focused on working with “financial professionals to help the ways in which they engage with the sector and drive value that can be gained from investing in structured investments, based upon research and astute use of what they can offer investors”.