Our approach to structured product design
Gilliat Financial Solutions is a new investment specialist in the design and distribution of structured products.
Being independent means that we are able to choose which financial institutions we work with and explore the entire market to find the most competitive pricing.
We understand the investment market and the various different products that are available to investors. Our Intermediary Sales Support team are in daily contact with investment professionals and receive first hand feedback on what investors are looking for.
In essence we have a four stage process when designing a product:
Stage 1 – Product definition
Through our close working relationships with the intermediary market we have an immediate and constant source of information for product requirements. We review market conditions, economic indicators and financial measures to help define the product variables and
parameters.
Stage 2 – Asset choice
The choice of underlying asset is critical in the performance of the product. Structures can be designed to follow any tradeable asset which supports derivative trading. Assets demonstrate different behaviour in varying market conditions and can be chosen to suit a range of economic environments. By providing a choice of underlying assets within our product, investors can build asset diversification into a single product.
Stage 3 – The payoff
This is the risk/return profile of the product. In effect it’s finding the right balance between the level of protection and the returns that the product offers to suit the needs of investors. Through carefully controlled use of sophisticated derivative contracts the availability of different payoffs is almost limitless.
Stage 4 – Counterparty
The financial institution that arranges the assets for the structure and thus the underlying credit risk of the product. We take the utmost care in choosing the right counterparties for our products. We undertake a number of financial checks and consider the track record and experience of the bank before adding them to our list of approved counterparties. We are also able to mitigate credit risk through collateralisation and the use of 3rd party paper.