Independent financial advisers (IFAs) in the UK have a fickle reputation when it comes to structured products. As a result, major issuers have shied away from providing and distributing products to the IFAs and some distributers have even retreated from the market altogether. However, Barclays Capital's Investor Solutions has significantly increased its market share in the past year by making its new offerings more accessible to the IFA community.
"As a distributor of structured solutions our visibility is probably at its greatest in the IFA market," says Colin Dickie, director at BarCap's Investor Solutions in London. "Core products such as the FTSE-linked plans are issued every two months. This gives IFAs familiarity and confidence so we can market our products over alternatives."
To make structured products more appealing to IFAs, BarCap's Investor Solutions has been distributing structured deposits that are specifically designed to sit within an offshore life bond, a staple offering for many IFAs. The Structured Deposits Series for offshore bonds, first launched in April, are structured in such a way to avoid the product and wrapper charges that typically occur with other investment products on offer.
Various index-linked structured deposits have been launched. The Guaranteed Minimum Return Equity Account has a three-year term and the Guaranteed Equity Deposit Account has a five-year term.
The deposits, launched in September, are linked to the performance of a basket of stock market indexes. The basket is equally weighted between the FTSE 100, S&P 500, DJ Eurostoxx 50, FTSE Epra Nareit and Tokyo Stock Exchange Reit indexes.
The three-year deposit is capital protected and offers the greater of a minimum return on the deposit of 10% or 50% of the rise in the value of the basket, subject to final-year averaging. The five-year deposit is capital protected and offers 130% of any rise in the value of the basket.
These structured deposits and other structured products are all available online. BarCap's Investor Solutions has launched an online application platform for IFAs, enabling private investors to access BarCap's core structured products range through the IFA's website. The system, primarily designed for IFAs who deal with the execution-only business, helps to reduce the administrative burden and complement other online facilities that they may use, such as the fund supermarket platforms.
Another technology solution provided by the team is its online trading platform. Launched in July, BarCap's Barx for Investor Solutions was created for the bank's clients that distribute BarCap's manufactured notes to the private banking community. The portal allows users to click and trade equity-linked structured notes. It also allows users to access secondary market prices across all asset classes.
According to Dickie, the number of bespoke deals has increased. For example, BarCap's Investors Solutions was asked to develop an 'environmentally friendly' product for a retail investor in the UK. The five-year Protected Ethical Plan is designed to provide investors with returns linked to the performance of the FTSE4Good Global 100 Index. This index measures the performance of companies that meet globally recognised corporate responsibility standards and facilitates investment in those companies.
BarCap's Investor Solutions is also able to distribute products simultaneously to both retail and wealth management segments of the market. An example is the Agricultural Commodities Plan which was launched in March. The final returns of the six-year Agricultural Commodities Plan are based on the performance of the Goldman Sachs Commodity Index Agricultural Excess Return - an index which tracks constituent commodities such as sugar, coffee and corn.
Dickie says that his team is focusing on developing structured funds for the IFAs. BarCaps' Investor Solutions has already teamed up with Morley Fund Management to launch the Morley Barclays Global Balanced Income Fund and the Morley Barclays Global Cautious Income Fund.
WHY BARCLAYS CAPITAL'S INVESTOR SOLUTIONS WON
To encourage more IFAs to look at structured products, BarCap's Investor Solutions is one of the first distributors to provide structured deposits that sit within an offshore bond. Few distributors in the UK are able to market structured products using online facilities such as its online trading and application platforms.
The week on Risk.net, December 9–15 2017Receive this by email