Rewarding the risks
Retail investors should ask more questions before putting their money into a structured product, beginning with whether they are being paid enough to take the associated risks, according to Investor Select Advisors managing director of research and investment Peter O’Neil Donnellon.
Having sold structured products for institutions, O’Neil Donnellon said that in the retail space there was a mismatch between the risks and rewards.
He is calling for greater fee transparency and believes too little is delivered to the end investor after the distributions and management fees are taken out.
“There is not enough understanding of what goes into these products for the people putting in their money,” he said.
“Where do you go to find the prices of these things and what charges are actually being made?”
He said structured products required special attention and greater oversight, which did not happen because of the capital guarantee factor.
“Because the end guarantee is there and you are unlikely to lose your capital there is that feeling of comfort that the regulator is looking for,” O’Neil Donnellon said.
“But in a competitive market, investors should be seeing better value for their money and better returns.”
Recommended for you
Digital advice tools are on the rise, but licensees will need to ensure they still meet adviser obligations or potentially risk a class action if clients lose money from a rogue algorithm.
Shaw and Partners has merged with Sydney wealth manager Kennedy Partners Wealth, while Ord Minnett has hired a private wealth adviser from Morgan Stanley.
Australian investors are more confident than their APAC peers in reaching their financial goals and are targeting annual gains of more than 10 per cent, according to Fidelity International.
Zenith Investment Partners has lost its head of portfolio solutions Steven Tang after 17 years with the firm, the latest in a series of senior exits from the research house.
