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Structured argument

I note with interest the “structured argument” put forward by Chris Taylor and Kerry Nelson and it seems to me that Kerry Nelson is trying to “have her cake and eat it too”.

I would love nothing better than to return to simple with-profits policies. They have been destroyed by vandals employed by a regulator and part-educated Government officials. I would argue, because I have seen it happen recently, that if Kerry Nelson feels it is appropriate advice to “encompass the good old fashioned investment strategies of accessing different asset classes and basing asset allocation on an individual’s requirement”, then she is living in cuckoo land. Opinions, it seems, vary.

I do use structured products and, for the most part, I find them excellent. The problem with structured products, as with everything else in the financial services market, is timing and the timing can be wrong and that is when Kerry Nelson’s pensioners lose their money.

Of course, that is regrettable but if she can assure me that people who follow the asset allocation rules have not lost money and she can prove it, then it is probably time for me to retire.

Our industry has been torn apart by people who will not let others have an opinion and fail to see that investing in money is no different than driving a car. We all expect to arrive at our destination but several thousand people a year fail to do so, permanently. Others spend years in hospital, yet we do not ban cars. We do do what we can to make them safe.

I will guarantee that most of the clients that Chris Taylor or Kerry Nelson see do not know what goes on under the bonnet of their car, yet they still get behind the wheel. They are still surprised when they break down.

Perhaps we all need to return to the real world. Utopia does not exist. “Only the best we can do at the time” exists and at this particular point in time.

Chris Taylor has my vote because the chances of the main indices collapsing has retreated and therefore the possibility of the underlying institution providing not only income or capital growth but the initial capital to be returned at the end of five or six years is fairly high.

Structured products are just one of a huge basket of possibilities but to ban mortgages because people might get into negative equity, to stifle the banks with regulation because they get it wrong or to follow Kerry Nelson’s perceived remedy for structured products by restricting them is to kill the goose that laid the golden egg. To pick up on another one of her points – just look at what happens with endowments and with-profits policies, they were taken apart by people who paid compensation on a long-term contract long before it was ever due.

They undermined the funds that were available for policyholders who stuck with their contracts and have subsequently lost out and they bent every commercial rule in the book to make sure they had their way.

I was disappointed with Kerry Nelson’s arguments and that is a shame because we all, as financial advisers, try a lot harder to do a good job and her “flogged by the masses” accusation infers we are careless and avaricious. The FSA must think she is sent from heaven.

Terence O’Halloran

Chartered financial planner

Lincoln

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Comments

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  1. I couldn’t agree more
    with the comments above and when I saw who had written them at the end of the letter I realised why. Terry is someone who understands clients and has theri best interests at heart. A bad workman blames his tools (structured products are just a tool as are any other investment), when it is misuse or over use which is usually at fault.

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