Blue Sky Asset Management product development director Mark Dickson said IFAs have to weigh up a combination of risk barometers, including credit ratings, credit default swap levels and political factors to take a personal view on counterparty credit strength as none can be relied on in isolation.
He said: “Credit ratings are never up to the minute and they are not intended to be. CDS are potentially a real-time indicator of relative credit strength between different potential counterparties but the market is not well regulated and not always heavily traded. Ultimately, they have to take a view.”
But Barclays Wealth director Colin Dickie said it is the provider’s job to help IFAs to understand the risks. He said: “I am keen to disclose particular stress test results to make sure IFAs understand the risks and potential outcomes of the product.”
Keydata Investment Services director of sales and str- ategy Mark Owen said IFAs need to consider the risk of a product in the context of a client’s whole portfolio.
“A client does not put all their money in one structured product with one bank.”