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James Chu, managing director for investments, Incapital Europe

Masterclass initiative tackles advisers’ understanding of structured investments


Structured investment provider Incapital Europe has launched an initiative to promote understanding of the products among financial advisers through an educational masterclass staged at locations throughout the British Isles.

The masterclass, which has been developed with input from the Institute of Financial Planning and is free to attend, is being staged at a total of 24 locations in a programme lasting until November 5.
The organisers say the events offer an overview of the structured investment industry, explain how structured investments work – including consideration of critical areas of advisers’ due diligence such as counterparty assessment – and provide guidance and case studies on how best to use structured investments within portfolios.
According to Incapital Europe managing director Chris Taylor, the masterclass is designed to offer advisers objective knowledge of the asset class ahead of the introduction of measures prompted by the UK Financial Services Authority’s Retail Distribution Review.
“FSA guidance makes it perfectly clear that independent advisory firms will be expected to have sufficient knowledge of structured investments to recognise when they may be suitable for client’s needs and risk profiles – and to make recommendations to include them in portfolios when appropriate,” Taylor says.
“An increasing audience of independent wealth managers recognises the value of structured investments, which include many benefits and advantages that cannot be accessed through active or passive fund options, but it is fair to say that adviser opinion in the UK remains divided.
“However, liking and using or disliking and not using an entire GBP50bn industry that is advancing and evolving rapidly is clearly a little simplistic. Knowledge is obviously key.”
The masterclass is hosted and presented by Taylor, Incapital Europe managing director for investments James Chu (pictured) and managing director of operations Mark Dickson. The event comes to Jersey on October 29.
Chu visited the island last month as a speaker at the Channel Islands Stock Exchange Summit conference, at which he discussed lessons from the credit crisis on risk management. He noted that risk management has become a science over the last 10 years, drawing on mathematical and statistical models that are designed to eliminate the need for subjective human judgment.
“But statistical properties in financial markets change, for example, correlation and volatility,” he told delegates. “The robustness of traditional risk management models and processes was challenged during the crisis.
“Financial markets are frequently affected by behavioural factors. They evolve and adapt, so the question must be asked whether human factors can be completely eliminated.
“Traditional ‘static’ risk management through diversification – for example mean/variance optimisation – has limitations. Acknowledging limitations in models, and considering the influence of human behaviour, has become more important.”
In addition to the Jersey date, masterclass events are scheduled to take place in London’s West End today, in Nottingham and Birmingham on Tuesday, Liverpool and Manchester (October 27), Leeds and Newcastle (October 28), Glasgow and Edinburgh (November 1), Belfast (November 2), Dublin (November 3), Guildford (November 4) and London City (November 5). The programme will conclude with a debate and media forum in London on November 10.

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