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Analysis of Financial Products

The Situation: Client wanting second opinion on a financial product

  • A client of a private bank was offered a five-year capital-guaranteed structured product. The productís performance and the capital guarantee were linked to the performance of the FTSE 100 index.
  • The client wanted a better understanding of how the product might perform and how he could achieve similar returns with alternative investments.

The Challenge: Giving client a full understanding of the potential risks and returns

  • Our goal was to explain to the client how the structured product was constructed. In doing so, we needed to familiarise him with fairly technical option structures.

The Resolution: Client makes informed decision not to purchase the product

  • After reviewing the embedded commission charges, and comparing the risk/return profile of the product with other more flexible strategies, we advised the client not to purchase the product.
  • The client was able to make an informed investment decision, in full knowledge of the productís technical features and how it compared to alternative strategies.