What modern structured products can do for clients

What do adviser and client investment conversations centre on?  Often, it is one of two things: clients sitting in cash and looking for better returns, or clients already invested in equities who want to bank some profits and take risk off the table.  That is exactly where modern structured products and deposits can be highly relevant.

Structured products are too often treated as niche or specialist solutions, when in fact they can be highly practical tools.  At their best, they help advisers match a client’s objective to a clear set of terms, a defined time horizon and a more balanced risk-and-reward profile.  In a market where clients are still trying to make sense of cash, volatility and income needs, that can be especially useful.

The real value lies in where structured products sit in the toolkit.  They can bridge the gap between cash and direct market exposure, offering the potential for returns that can exceed cash while avoiding the full risk of owning equities outright.  For many clients, that middle ground is exactly what they are looking for.

This is not about claiming structured products are right for everyone.  It is about recognising that different clients need different solutions.  Some want capital protection.  Some want growth with a defined level of risk.  Others want income or a more predictable outcome than a traditional equity strategy can provide.  Structured products and deposits can support those aims in a way that is clear, disciplined and commercially sensible.

A useful way to think about them is not as a replacement for cash or equities, but as a complement to both.  Cash may suit short-term needs, but it offers little in the way of growth.  Equities may offer higher long-term potential, but they also bring direct market risk and greater uncertainty.  Structured products can sit between those two ends of the spectrum, providing a defined proposition that many clients understand once it is properly explained.

That is particularly relevant in the current advice environment.  Clients are more aware than ever of volatility, sequencing risk and the impact of sitting too defensively for too long.  At the same time, advisers are expected to justify product selection carefully, consider fair value and evidence that solutions meet a genuine client need.  In that context, structured products deserve to be assessed on their merits rather than dismissed by habit.

The practical application is where they really stand out.  A client approaching retirement may want something more dependable than a conventional equity portfolio, but better returns than cash.  A cautious investor may be willing to accept limited upside in exchange for a defined outcome and some downside mitigation.  A client with a lump sum may want a solution that offers more than a deposit, but without full market exposure.  In each case, the key benefit is clarity.

That clarity is also important for expectation management.  Structured products work best when advisers can explain the trade-offs simply – what happens if markets rise, what happens if they fall, what level of protection is in place and what the client is giving up in exchange.  Once that conversation is had properly, the product usually stops looking complicated and starts looking purposeful.

Take, for example, a client who wants to invest beyond cash but is uncomfortable with the full volatility of equities.  A structured deposit or capital-protected solution can offer a defined term and a clear potential return profile.  Or consider a client with a longer time horizon who is willing to accept some risk in return for the possibility of enhanced growth.  A capital-at-risk structure may be a better fit than either cash or a direct equity holding, provided the risks are fully understood.

That is why modern structured products should not be viewed as an awkward afterthought.  They belong in the same serious conversation as deposits, income solutions, cash and portfolio-based strategies.  Their role is not to be everything to everyone, but to provide a specific solution for a specific need.

For IDAD, that practical usefulness is exactly the point.  We believe structured products and deposits have a genuine place in adviser conversations when they are designed well, explained well and used appropriately.  In the right circumstances, they can help advisers deliver solutions that are more defined than equities and more rewarding than cash, without the need for direct market exposure.

The strongest case for structured products is not that they are clever. It is that they are useful and for the right client, that usefulness can make all the difference.

For firms or advisers wishing to learn more or revisit the benefits of structured products and deposits, IDAD can also provide accredited CPD training