Structured Product

An instrument that pairs a traditional security such as a bond with a derivative which gives a pay-off based on the performance of something else, such as the price of gold or a stock market index. They’ve proven popular as they give retail investors access to otherwise hard-to-reach asset classes such as interest rate spreads, currency or commodity derivatives. Structured products come in all shapes and sizes – some offer principal protection while others offer leverage, and they’re often extremely complicated. The return on the performance component can be capped or not realized all together if the underlying asset performs below expectations.. Being highly customized, structured products can be illiquid. As any returns on the performance component are not reaped till maturity, structured products are often considered buy-and-hold investments.

A Clear Line in the Canadian Annuity Market

Canadian Finance Minister Jim Flaherty intends to propose legislation that bans banks from selling products that are similar to annuities.

Canadian law already prevents banks from selling annuity products.

Canadian finance officials are apparently concerned that the lines between annuity and banking products are increasingly blurred.

Bank products that are represented as lifetime cash flow vehicles presumably fall under this area of concern.

Writing the Book on Retirement Portfolios

Anyone thinking about retirement income should pick-up a copy of Retirement Portfolios by Michael Zwecher. This recommendation applies to both financial services professionals and consumers who are approaching or at retirement.

Zwecher’s book is the definitive guide to constructing and maintaining portfolios that generate sustainable retirement income.