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Forward Thinking Magazine : December 2010
41 thought leadership More up, less down van der Westhuyzen says feedback from advisers is that they want capital protection solutions that provide more upside from market rebounds. “Investors value protection but not at any price,” he says. “They want products that can handle market conditions like the ones we’ve just experienced.” He adds that the capital protected products of the future will suit a wide range of investors including: Wealth accumulators who may have lost a proportion of their wealth in the recent volatility and are reestablishing their portfolios using a combination of gearing and protection to rebuild, or who are approaching retirement and are `catching up’ in building their retirement nest egg. Those who are just starting out and want access to 100 per cent gearing and capital protection to maximize their leverage. Those who have built substantial wealth and want to put a floor under it because they don’t want to lose it. Those who invest in Australian equities but want to diversify into other markets such as Asia where it is easier to get exposure through managed funds but the markets are volatile, so protection may be recommended. Retirees who are now in term deposits but have a long term need to restore their wealth post the global financial crisis. Future solutions van der Westhuyzen says there are changes occurring in the industry in how capital protected products fit into the advice process and he says there are a lot more requests from advisers for seminars to explain them. “They want to know how the portfolios will perform before putting protection in place,” he says. “Advisers want to be part of the process during the entire term so they can assist in changing the asset allocation and existing investments if needed.” He says the next generation of these products will recognise that it is not a case of one size fitting all, and so will feature more flexibility, simplicity and control, enabling advisers to customise an investor’s solution. “Advisers want to be able to put individual solutions in place which are more relevant to a client’s needs, and they want to offer tax certainty through ATO Product Rulings.” He adds there will always be a place for traditional capital protected products but there are investors who want a more customised, platform-friendly solution and this is what the next generation will provide. The next generation of capital protected products will overcome these limitations as well as be more able to be offered effectively through different investment platforms... Doug Chang, Head of Product Management, Macquarie Adviser Ser vices