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Chelsea calling for debate on structured plans

IFA Chelsea Financial is urging advisers not to blacklist structured products across the board until there has been an informed debate on their worth and future prospects.

Structured plans have come under a barrage of criticism recently as many – including New Star&#39s forthcoming product – include volatile stocks from the Nasdaq 100 or Techmark indices which have virtually imploded, such as WorldCom.

In a report this week, Chelsea says investors should not necessarily be deterred from buying such products. It points to its own research which provides no definitive answer as to whether structured products perform better or worse than other forms of investment.

It says the main problem is the way that products have been marketed, with increasing numbers of investors attracted by claims of high levels of income or growth while remaining ignorant of the significant associated risks.

Chelsea&#39s report warns that if investors want to receive three-times base rate returns, they cannot expect their original capital to be held in a guaranteed environment. If they are made aware of this, there can be no potential for misselling.

The report says: “We call for an informed and educated debate as to their worth and to avoid blacklisting structured products as a whole. We need to put these investments into context.”

Hargreaves Lansdown head of research Mark Dampier says: “Parts of structured products could be good for investors but we never get informed debates in financial services.”

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