Old Mutual International (Omi), the international arm of Old Mutual Wealth, has launched a new structured products initiative in cooperation with issuers, to improve the investment case for the international retail buyer. The initiative has an ambitious goal of setting 'a new benchmark' for structured products, creating a new breed of investment solution which offers better value, simplicity and transparency to investors, according to Omi.

The initiative aims to reduce the production and distribution fees on structured products sold via the Omi network, as well as to make the products themselves more transparent and easy to understand. Omi notes that the fee reduction on a sample five-year product pegged to the HSI, S&P 500 and Eurostoxx 50 indices could lowering the capital protection barrier from 75% to 50%, meaning that the basket could fall a further 25% before any capital is at risk.

Additionally, all capital-at-risk products' index underlyings must be found within an initial list of 41 well-known indices provided by Omi. All worst of capital-at-risk products should be linked to no more than three indices, while only European-style barriers will be allowed, according to Prakash Chandramohan (pictured), head of international product, Old Mutual Wealth. Furthermore, all products' outcomes should be based on simple, easy-to-measure conditions, with examples of how to track performance outlined in the client product literature. However, there are no specific restrictions with regard to payoffs, according to Chandramohan.

"A growing number of international advisers are recognising the effect that regulatory change and shifting client expectations will have on the international advice market," said Chandramohan. "Advisers understand they will need to adapt their business if they are to thrive in this new world."

The international advice market is evolving, and Omi sees increasing demand from advisers who recognise the need to embrace change and adapt, but don't always know where to start.

BNP Paribas' new Committed to the Future (CTF) range has been developed in close cooperation with Omi, and is the only offer currently available under the new initiative. The range includes three certificate-wrapped products, two of which are available in both US dollars and UK sterling denominations, and the third in dollars only, offering exposure to a set of international indices.

These investments have been designed to meet Old Mutual International's eligibility criteria and are only available via Old Mutual International portfolio bonds, according to Chandramohan. "There is strong interest from other product manufacturers to work with us in the future," said Chandramohan.

"Products will be available regularly, with a 4-6 week subscription period," he said. "These products will not be branded in a different way, but we will keep advisers informed regarding the structured products which meet the new criteria."

The initiative is set to complement Omi's Future Fit programme and comes at a time when the European Union's packaged retail and insurance-based products (Priips) framework was originally set to come into force (January 1, 2017), bringing in major changes in the structured products market, aimed at delivering a more transparent and straightforward investment case for retail buyers.

"The criteria that these new products meet will set a new benchmark for the structured products industry in international markets," he said. "We believe the benefits to advisers and customers will be self-evident, whether they look at the coupon levels, protection barriers or simplicity of the underlying assets on offer with the new products."

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