Education and simplicity key to Netherlands market recovery

Investors in the Netherlands are still wary of structured products. A return to simple products and boost in educational efforts is needed to overcome this, according to bankers at Structured Products' conference for the Benelux region in Amsterdam

Netherlands bankers want a focus on simplicity and education

Investor confidence in structured products in the Netherlands has been severely hit by the crisis and it is still recovering; investors are still risk averse and concerned about counterparty risk. The solution to this is more education and simplicity, according to bankers at the Structured Products Benelux conference in Amsterdam in early June.

"The client is risk averse, there are still a lot of people looking at the situation of the market recently," says Koen Zountenbier, director of structured products at Kempen in Amsterdam. "The way we sell things is done through the brochure but there is a lot more, [we need to ask,] are we complete in our sales story?"

There needs to be more focus on educating not only clients, but also the distribution network, which does not always fully understand the products it is selling, according to Zoutenbier.

"We need to educate our distributors. The bigger banks need to tell their distributors what the product is all about," he said. "Simplicity is important so that the client understands it. If the distributor understands it, he will sell it. What we see is that the number of people working in the industry has decreased but the demand for servicing has increased."

Others agree the levels of education need to be improved. "Education, education, education is the key," says Robbert Barth, senior supervisor, structured products, at the Netherlands Authority for the Financial Markets in Amsterdam. The product providers are best placed to offer this education, he added.

A lack of education means the potential value to be gained from structured products is often not realised, he adds.

Zoutenbier agrees. "The outflow from structured products is due to complexity, illiquidity and uncertainty about counterparty risk. The level of complexity makes people want to say good bye," he says.

There needs to be more focus on the literature to combat these problems, as well as an established secondary market, Zoutenbier says, especially as simplicity, transparency and liquidity are still key concerns.