Over all my years running networks, I longed to have a black list of firms who were banned for one reason or another. In fact it is remarkably hard thing to do without getting sued, because all funds have a supporter who will swear by them and feed any negative information back to the fund manager who will then harangue you. I never got there, to my shame, but now that I am wiser, I am beginning to care less about what I say and how I look to others.
However the Metlife bonds give us a run for our money at IFAC, and not least because of their popularity with advisers! I have always got on well with the Metlife broker consultants, and that is always a good sign. I also like the structured product universe, and invest my own money in structured products - exchange traded for guaranteed liquidity by the way. However our file checker in chief is adamant that there is something wrong with these Met life bonds – or rather, he struggles to pass them first time as suitable.
They are marketed in a low risk way, but only a few clients are suitable for them. Partly this is because the FCA have a jaundiced view that Structured products are high risk – which means that your sales are treated as high risk in line with most standard Procedure manuals, and certainly with the IFAC versions that our members use.
Nick the file checker sums it up as “The policies have improved but generally I think advisers should look for other solutions.”
The problems are based in the complexity, and he struggles to understand them, and I must confess that I do myself. And if we struggle, then so does the FOS and so on. It doesn’t make it wrong, but it increases the risk - a risk that you don’t need to take, even if the lock in period expiry dates do give you an excellent reason to revisit your clients.
Ironically for DFM advisers this is a much easier process. There is universe of exchange traded ETFs and there is less onus on DFMs to ensure suitability per product, per person – partly because the customer has handed over discretionary powers. And when it comes to FCA instigated back book reviews, DFMs are almost always exempt. So to summarise, we all want to do the best for our clients, but try too hard and you risk your neck.