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Wealth Manager: Chris Taylor on structured product strategies for private clients

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by David Campbell on Jun 27, 2013 at 00:01

Chris Taylor’s website suggests a man keenly aware of opportunity costs.

The former chief executive and founder of structured products business Blue Sky Asset Management lists no less than eight discreet services provided, from straightforward consultancy and PR to human resources through to compliance (sadly for those in the market for digital media, the area remains under construction).

Opportunity cost for his client base of wealth advisers is also one of the biggest drivers of his Investment Bridge business,
he says.

While the menu of expertise suggests a renaissance man as experienced in headhunting as he is in brand strategy, the majority of business remains private client intermediaries aware they may be missing a trick, but unsure where to start with structured products.

‘[Investment Bridge] is an integrated consultancy and service, but the core is my background servicing the sell and buy-sides,’
he says.

He concedes that coming to the market for the first time as a potential buyer can be bewildering for a investor who has traditionally limited themselves to selecting investment products with a relatively straightforward return structure – you buy it and hope it goes up – and relatively little counterparty risk.

But some of the subtleties in understanding the risk/reward payoff have historically been lost in a fiercely partisan debate between pro and anti-forces waging war in the comment sections of trade media websites.

‘The key is, it’s not more risk. You are taking out some of the volatility risk and replacing it with some credit risk and counterparty risk, while defining the alpha.

‘The [retail distribution review] has brought a requirement for independent advisers to review whole of market, which has created a new audience... they have to demonstrate they have done a comparative analysis.

‘Wealth managers and advisers who describe themselves as pro-passive need to recognise that a structured product is passive with bells on. [But] one of the legitimate criticisms of the industry is the way it has focused on a transactional product level. There is an appreciation that these things now need to be planned to work at [an investment] strategy level.’

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