Expander, a Polish financial adviser, has hit the jackpot with the latest issue of its Euro Top 50 product, which sold more than PLN45m (€11m) in March, becoming the company’s second highest-selling product. The 3.5-year growth uncapped call linked to the iStoxx Europe Next Dividend Low Risk index was offered in four versions with various capital protections ranging from 100% to 90%, while the participation on the underlying's performance ranged between 40% and 110%.
“This is the first time this underlying has been offered in the Polish market,” said Piotr Nowak, director of investment and life products at Expander Advisors.
Around 95% of structured products in Poland are distributed through banks, according to SRP data, which puts independent financial advisers (IFAs) at a disadvantage.
“For IFAs in Poland, it is quite difficult to compete with banks as they have much bigger distribution networks and are therefore able to gather higher volumes,” said Nowak. “In Poland, only Expander and another advisory company, Open Finance, are distributing structured products outside the banking network. For small advisory companies, there are limitations to entering the structure product market, as they would need to raise the minimum size.”
For products wrapped as unit-linked policies, the smallest deal requires around PLN3m, while for endowment policies the minimum size would be at least PLN5m, according to Nowak.
Other advisers are discouraged from entering this market due to a lack of personnel with knowledge of structured products and “educated sales personnel able to explain and skilled and experienced product development teams”, said Nowak.
Products distributed by Open Finance are sold via Getin Group subsidiaries and Open Finance advisory which is considered an additional salesforce to the bank’s distribution network, according to the SRP database.
As reported, in April, ANG, a domestic IFA, joined efforts with technology provider Modelity to enter the structured products market in Poland.
Despite the unlevel playing field, Nowak highlighted the ability of small firms to be more flexible than big banks. “Banks need more time to act or react to new ideas and when they launch a structure they stick to subsequent tranches for months,” said Nowak. “Being small and independent [allows us to be flexible] with product variations and we can offer investment solutions with higher participations.”
Being small and independent brings other advantages, such as being able to shop around for the best counterparty, said Nowak. He points to BNP Paribas and Natixis as two of its preferred counterparties when it comes to pricing and "custom-made solutions".
Expander was behind the first TV advertisement promoting structured products at the end of last year and is considering launching a follow up campaign. “[The campaign] didn’t have an immediate effect, but it was successful as it created greater interest among investors and helped to educate them,” he said.
The IFA’s strategy is to launch at least one structured product each quarter, said Nowak. The Euro Top 50 life insurance product was offered in four versions with various levels of capital protection ranging from 100% to 90%, while participation in the underlying asset went in the opposite direction, from 40% to 110%.
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