SRP Europe 2025: educating the advisers to increase adoption

Thomas Chin, global head of structured products at Bloomberg, who moderated the panel, asked how clients use structured products and in what way they complement their investment portfolios.

Clients use capital protected products as an alternative for bonds, especially in decreasing yield environments - Marcel Pronk

At Van Lanschot Kempen, structured products are mainly used within advisory portfolio concepts, according to Marcel Pronk, director treasury sales, structured products & FX at the Dutch wealth manager.

“We have a traditional core portfolio, mainly consisting of traditional investments like bonds and cash equity, and around that we have satellites, which could be private equity or structured products,” said Pronk.

“Clients use capital protected products as an alternative for bonds, especially in decreasing yield environments or they use autocalls to diversify from a direct investment in equities,” Pronk added.

MoraBanc used to target structured products directly at end-investors, but nowadays they are also for portfolio managers who have different needs, said Ferran Vila (pictured), head of structured products desk & flow desk, capital markets.

“We continue with the typical client in private banking, but we are also doing AMCs for instance, which are very adaptive to activity of portfolio managers,” Vila said.

_{Left to right: Thomas Chin, Matt Linker, Steve Lamarque, Marcel Pronk and Ferran Vila}

Things are similar at Hilbert Investment Solutions, according to Steve Lamarque, CEO and founding partner at Anglo French boutique, whose clients want exposure to the markets, but with a defined outcome, “whether that’s income, yield or capital protection”.

“The beauty of structured products is that they kind of fit everyone’s needs and in all market conditions,” said Lamarque.

Particularly in our Apac business, clients are accessing alternative risk premia through structured products - Matt Linker

Matt Linker, head of derivatives, Arta Finance has seen clients using deep barrier strategies attached to higher volatility assets to get exposure in a more risk managed way, especially on the satellite side of the portfolio.

“Particularly in our Apac business, clients are accessing alternative risk premia through structured products.

“Often, we have very sophisticated clients who understand how derivatives work at much deeper levels, and they know that otherwise they are not able to get access to some of the exposures that we are giving them,” Linker said.

Product types

Vila noted that at MoraBanc, in recent years there have been very strong volumes in credit-linked notes (CLNs) on investment grade senior names, but now these products are coming to maturity, the market is no longer there to provide rollover opportunities.

“We are now looking to offer structures linked to crypto assets, with 80-90% capital protection and maturities between one and two-years,” he said.

_{Left to right: Matt Linker, Steve Lamarque and Marcel Pronk}

The Dutch and Belgian markets are very traditional markets in what they offer, according to Pronk. “Client advisers advise the same type of products year after year […] its very difficult to convince them to do something else.”

Whereas in Belgium, capital protected products linked to interest rates dominate, in the Netherlands investors prefer autocalls linked to single equity indices, mostly the Eurostoxx 50, although recently there has been an increased demand for high dividend indices.

“The biggest challenge is education,” said Pronk adding that it is extremely important that client advisers are comfortable advising structured products to their clients.

“If you are not adequately educating the investor, if they don't understand what it is they are buying, then you're not going to get very far,” agreed Linker.

“We have been very, very careful in every market, to start with products that are already popular in that market, that the investors and their advisers are already familiar with.”

According to Linker, especially in Apac and the US, a common topic of discussion is that often far too much of the value of a structured product is getting eaten up by fees for the advisor.

“That's something that we are very focused on – designing policies and procedures to fight against that – but more can be done, and more should be done by the industry.”

Investors are looking for diversification across products and counterparties, said Lamarque. “We have seen a move from a lump sum to more regular contributions, mainly for retail,” he said.

Digitalisation

A Slido poll conducted during the panel showed that most of the audience believed digitalisation will be one of the main drivers of the structured products market in the coming years.

“We are seeing a lot more fragmentation, and there are a lot of folks who currently are underserved by the structured products market who could be better served […] the only way to do that is through an increased digitalisation,” said Linker, who added that in Asia there are already multiple apps where you can transact directly without ever speaking to human.

_{Left to right: Thomas Chin, Matt Linker, Steve Lamarque, Marcel Pronk and Ferran Vila}

Lamarque believed that digitalisation would make life easier in the back-office process, but he was adamant that the financial adviser should remain at the centre of the advice. “In our business model, we will stick to that […] we need that human interaction to advise on the right products,” he said.

Pronk agreed on the importance of digitalisation, especially as it could help decrease ticket sizes and allow for customisation for specific clients. “I echo what Steve [Lamarque] already said, every advisor needs to understand the product but also needs to understand how it fits in the client’s portfolio,” he said.

“There is sometimes this view that there needs to be much more explanation the moment something becomes a structured product,” Linker concluded.

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