SRP China 2025: towards simpler, more transparent structured products

Tony Zhu, Shanghai chapter head association of family offices in Asia, set the stage for a discussion about structured products in portfolio management, wealth management strategies and the goal of responding to client needs, emphasising the practical execution of investment approaches.

Zhu highlighted the importance of understanding structured product mechanisms and risks to deploy them effectively in wealth management strategies and that product development should be driven by client needs.

We believe customising education to client needs is key to increase adoption - Michael Chang, HSBC

Michael Chang (pictured), head of capital market & FX, investments & wealth solutions, wealth and personal banking, China, HSBC, noted that one of the main challenges for the market continues to be tailoring client education based on client and product types.

“We have invested in internal training and certification tests for our sales teams,” said Chang. “We also use WeChat and AI-powered virtual CIO products for client education. We believe customising education to client needs is key to increase adoption.”

_{Left to right: Tony Zhu, Shanghai chapter Association of Family Offices in Asia; Michael Chang, HSBC; Tong Jin, China Merchants Wealth Asset Management; James Chu, Tricio Partners}

James Chu, director and head of investment solutions, Tricio Partner, highlighted the need to assess client risk preferences across different life stages.

“In order to deliver the right products, there must be an understanding of clients' changing circumstances,” he said. “We would recommend annual check-ins with clients to understand their evolving needs. With structured products the focus should be on protecting capital and defining clear investment outcomes.”

We have a responsibility to warn about the risks of complex products - Tong Jin, China Merchant WAM

Transparency and simplicity in product design was also underscored by Tong Jin, head of multi-asset solutions, China Merchant Wealth Asset Management, who also pointed at the importance of helping clients understand product risks.

“We have a responsibility to warn about the risks of complex products to avoid situations like we saw in the past with snowball products,” he said.

Overall, the panellists agreed that client education remains crucial in the continued adoption of structured products in wealth management and concluded that it should be personalised while wealth managers should focus on transparency, simplicity and understanding individual client needs and risk profiles.

Applications

Talking about the role of structured products in investors’ portfolios, Chang pointed at diversification as a key element to building a balanced portfolio.

“Structured products provide a very efficient tool to enable downside protection on portfolios,” he said. “Structured products can offer more protection compared to traditional long-only equity investments.

“These products can also help optimise portfolio returns, especially in low-interest-rate environments.”

Tong Jin added that the focus at China Merchant Wealth Asset Management is on creating “simple and transparent” structured products.

“We work to reduce client decision-making complexity,” he said, adding that structured products “can play an important role in optimising client portfolios as well as provide exposure to overseas assets sought by Chinese investors.”

_{Tong Jin, China Merchants Wealth Asset Management}

Tricio’s Chu agreed and advocated for integrating structured products into wealth management portfolios with a long-term view.

“These products can align with the long-term goals of investors,” said Chu, adding that there is scope to leverage the capital protection and defined investment outcomes to expand their application to specific needs like paying for education and pension planning.

“Structured products are a very efficient tool for risk management and enhanced returns.”

Market Trends

Looking at market trends and client preferences, China Merchant’s Tong Jin observed that high net worth individuals in China are more educated about structured products and have clearer return expectations than retail investors.

“On the retail side, investors want transparent products with clear return expectations,” he said. “We see a trend towards simpler, more straightforward product designs.”

Jin Tong added that structured products are well positioned to continue growing in the country as investors are looking for exposure to overseas assets as well as optimising existing portfolio positions and implement protection strategies for equity holdings.

Chang noted that despite the increasing popularity of structured products in China current structured product usage is still low.

“Structured products have potential for growth in China,” he said. “Investors are still learning about these products. That’s why continued client education will be key going forward.”

Chu concluded that structured products can adapt to the changing client preferences across different life stages.

“Modern investors have more complex financial situations and individual needs,” he said. “Understanding those individual client needs will be key to deliver more flexible investment solutions.”

The panellists collectively concluded that the market is evolving and that a sustainable growth would only be achieved with a focus on client-centric, transparent and easy to understand solutions.

---

Do you have a confidential story, tip or comment you’d like to share? Contact Us | SRP (structuredretailproducts.com)