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WHITE PAPER: ‘STRUCTURED PRODUCTS: USPs; EVIDENCE; NEED; & COGNITIVE BIASES’  
WHITE PAPER: MONEYFACTS Q&A WITH ANTHONY VILLIS, MD OF FIRST WEALTH  
WHITE PAPER: ONLINE TEST (REQUIRED FOR CPD)  
Sector-wide data / facts regarding the performance of matured UK retail structured products  
Tempo's first 10 plan maturities: Maturity Performance, analysis and comparison  

We launched our product suite in June 2018. Our plans therefore started to reach their first kick-out anniversary dates and potential early maturity points at the 3rd anniversary, in June 2021.

We produce maturity performance and comparison overviews for each of our plan maturities. These include: a reminder of the terms of each plan / plan option; details of the maturity performance and analysis; and comparisons to pertinent benchmarks, including: the index that the product was linked to, e.g., the FTSE 100 EWFD; the FTSE 100; and a FTSE 100 tracker fund, with dividends re-invested.

A summary of the maturity performance and comparison overviews for each of our first 10 matured plans can be found below.

The full maturity performance and comparison overviews for each of our matured plans can be found in the carousel below and in the products section of our website (click here).

Our plan maturities add to the sector’s evidence that structured products work, helping highlight the significant and important USPs of structured products and the specific merits of Tempo’s plan design and approach.

Tempo maturity performance and comparison overviews  

Our ‘maturity performance: and comparison’  overviews provide: a reminder of the terms of each plan / plan option; details of the maturity performance and analysis; and comparisons to pertinent benchmarks (including: the index that the product was linked to, e.g., the FTSE 100 EWFD; the FTSE 100; and a FTSE 100 tracker fund, with dividends re-invested).

The maturity performance and comparison overviews: highlight the significant and important USPs of structured products; evidence the efficacy of structured products; and shine a light on the potential merits of including structured products in diversified portfolios.

Register for your place at one of the 2022 SERIES OF TEMPO LIVE VIDEO WEBINARS  
Access the TEMPO PROFESSIONAL ADVISER ACADEMY MODULES  
Access the TEMPO RECORDED VIDEO WEBINARS  
TEMPO: TICKING THE BOXES  

‘Tempo: Ticking the boxes’  highlights what we are doing differently, all of which is explained in more detail in our full materials and presentations which we provide to professional advisers as part of our initial mutual due diligence process.

TEMPO PRODUCT GOVERNANCE OVERVIEW  

We believe that best practice governance and compliance is: first and foremost, client-centric; second, best for the professional adviser firms which we work with; and third, best for us as a business, providing an opportunity for us to demonstrate best practice, raise the industry bar, and show how we think structured products can and should be done.

Of course, saying this is one thing: but demonstrating and evidencing that we mean it and that we do what we say is key … noting also that PROD (3.2.16 (2)) requires manufacturers to make ‘all appropriate information on our product approval process’  available to distributors.

We are proactive and transparent in providing details of our product governance process – and in explaining and discussing why we do what we do and how we do it.

Our product governance process comprehensively details how we conceive, design, develop, distribute and manage our products through their lifecycle.

Our product governance process includes various steps, groups and committees, which incorporate various inputs, checks, controls and sign-offs, in a consensus-driven decision making approach.

Each step / group / committee in our process operates with clearly documented terms of reference, detailing their: purpose and objectives; attendees; voting members / quorum; conduct; inputs and outputs.

We create and retain audit trails of our product governance process in practice, including the dates of and minutes from the group and committee meetings involved throughout our process.

The full terms of reference for each group / committee and the audit trails of our process in practice, including the dates of the group and committee meetings, can also be made available.

TEMPO PROFESSIONAL ADVISER INFORMATION PACKS (‘PAIP’)  

Our professional adviser information packs (‘PAIPs’)  are designed to:

– explain how we meet our manufacturer product governance responsibilities under PROD (particularly PROD 3.2.16), providing distributors with specific information; and

– help professional advisers meet their distributor product governance responsibilities under PROD (particularly PROD 3.3.1), which states that distributors must:

i) understand the product they distribute to their clients;

ii) assess the compatibility of the product with the needs of the client to whom they distribute investment services, taking into account the identified target market of end clients; and

iii) ensure that the product is distributed only when this is in the best interests of their client.

Our PAIPS include details of our target market identification, scenario analysis (back-testing and forward-modelling) and value-for-money assessments – and the FinDatEx recommended European MiFID Template (‘EMT’), regarding target market, distribution strategy and cost information.

Examples of our professional adviser information packs (‘PAIPS’), for each of our plans, can be found below:

TEMPO PRODUCT PROPOSAL PACKS (‘PPP’)  

Our product proposal packs (‘PPPs’)  are made available to professional advisers in order to:

– provide transparency with regard to our internal product governance processes behind our products; and

– support professional advisers in their product research and due diligence

Throughout the PPP numbers in [ ] (e.g. [3.2.1 (1)]) are references to PROD, providing context to help explain why we consider certain elements in our product governance process in order to:

i) meet our manufacturer product governance responsibilities under PROD; and

ii) help professional advisers meet their distributor product governance responsibilities under PROD.

Examples of our product proposal packs (‘PPP’), for each of our plans, can be found below:

TEMPO EXAMPLE PLAN BROCHURES  

We have worked exceptionally hard on our investor-facing plan documents, including our plan brochures. Our aim is to provide the best-in-sector plan literature.

We have had high level, multi-disciplinary regulatory and legal input from leading law firm Simmons & Simmons: and rigorous input and guidance from Plain English Campaign.

We are the first structured product firm – and one of the first investment firms of any type – to become a corporate member of Plain English Campaign and to have all of our investor-facing plan literature scrutinised and ‘crystal mark’  accredited by the Campaign to be jargon-free and using language which everyone should be able to understand.

The ‘crystal mark’  is Plain English Campaign’s seal of approval for the clarity of a document: it is the only internationally recognised mark of its kind.

We are still surprised that the number of financial services firms genuinely committing to using plain English is so small … for something which is so obviously and non-contentiously positive and part of ‘doing the right things – and doing simple well’. To our minds, it doesn’t get much simpler than using plain English!

In addition to the content and the plain English descriptions and explanations of features and risks, we have also given careful consideration to the design of our plan literature, including the pagination and layout, focusing on the readability and reader experience and engagement, to help ensure investor interest, engagement and understanding.

Examples of our plan brochures, for each of our plans, can be found below:

TEMPO EXAMPLE ‘IF / THEN …’ SUMMARIES  

Our ‘if / then …’  summaries accompany our full plan brochures and provide simple, colour coded, single page summaries of the key contractual terms, conditions, risks and potential outcomes of our plans.

Examples of our ‘if / then … summaries’  for each of our plans, can – be found below:

TEMPO EXAMPLE SUITABILITY LETTER INPUTS  

We have worked hard with our lawyers and Plain English Campaign to ensure that our investor-facing plan brochures and ‘if / then …’  summaries explain our products using simple language, avoiding unnecessary jargon and aiming to provide explanations which everyone can understand.

We have also worked with Plain English Campaign to prepare crystal mark accredited suitability letter inputs, to assist professional advisers using our products.

The inputs are designed to help professional advisers construct suitability letters, with plain English wording to explain factual information, covering various sections which may be helpful within suitability letters, such as: what a structured product is; why investing in a structured product is being advised; the importance of portfolio diversification; the features and risks of our specific products; the importance of understanding the key risks, such as counterparty and stock market risk; as well as highlighting both the positive and negative target markets.

It is important to highlight that these inputs do not take account of the investment objectives, particular needs or financial situation of any client or potential client of any professional adviser, and the headings and layout should not be taken as a guide for how a suitability letter should look or what a suitability assessment and letter should include.

Professional advisers are responsible for ensuring that their suitability letters are current and appropriate for any client and comply with all applicable laws and regulations.

We have provided the inputs in word format, so that professional advisers can copy and paste and use and make changes easily and conveniently.

Examples of our suitability letter wording inputs, for each of our plans, can be found below:

TEMPO ISSUER & COUNTERPARTY SCORECARDS (‘TICS’)  

We are an independent plan manager (not a bank issuing its own paper / products).

We think it’s straightforward – and important – to state the obvious: issuer / counterparty risk is the most fundamental risk of a structured product; both the potential returns of a structured product and the repayment of capital usually depend upon the financial stability of the issuer / counterparty throughout the investment term.

Professional advisers and investors should seek to identify structured products backed by strong issuers / counterparties.

We developed, maintain, publish and provide professional advisers with access to ‘TICS’  (the Tempo Issuer and Counterparty Scorecards).

TICS provides a bar-raising resource supporting professional adviser issuer / counterparty research. It is designed to provoke and support more detailed and objective consideration and understanding – including comparison – of issuer / counterparty financial strength / credit risk.

TICS covers all 30 global systemically important banks (‘G-SIBs’)  and a small number of domestic systemically important banks (‘D-SIBs’).

It compiles and provides access to multiple indicators of financial strength and credit risk that are widely recognised as pertinent to analysing, considering and understanding counterparty bank financial strength / credit risk, using a robust methodology, including a scoring system, across 5 individual ‘Category Scorecards’, covering 27 different ‘Factors’.

We publish TICS each month, producing 9 outputs for professional adviser use. Full details can be found via our website: https://tempo-sp.com/tics.

As part of TICS, we publish the ‘TICS: Side-by-Side View’, each month. The ‘TICS: Side-by-Side View’  provides the raw data used within TICS for the main UK retail structured product issuers / counterparties, displaying the data so that it can be looked at and assessed ‘side-by-side’.

You can access the ‘TICS Side-by-Side View’  via our website: https://tempo-sp.com/tics/side-by-side-view.

We also produce and publish ‘TICS: Reports’  for the main UK retail structured product issuers / counterparties, each month. The ‘TICS: Reports’  include both the raw data used within TICS and the TICS scoring that we attribute to each TICS Factor (highlighting the worst, best and average data point for each factor) and each TICS Category, for each issuer / counterparty.

You can access the ‘TICS: Reports’  for each issuer / counterparty via our website: https://tempo-sp.com/tics/reports

I PREFER

Click here to access the ‘TICS: Reports’  for each issuer / counterparty via our website.

Module 4 of our Academy explains counterparty research, including credit ratings, credit default swaps (’CDS’)  and balance sheet fundamentals.

You can access module 4 via our website: https://tempo-sp.com/our-academy/our-professional-adviser-academy

I PREFER

Click here to access module 4 via our website.

Examples of our ‘TICS: Side-by-Side View’  and ‘TICS: Reports’  can be found below:

Thoughts and suggestions from professional advisers  
Thoughts and suggestions from industry commentators  

Quick links

  • WHITE PAPER: DIGITAL VERSION

  • ‘Structured products: USPs; Evidence; Need; & Cognitive biases’.  Please click here to access the digital version.

  • WHITE PAPER: PDF VERSION

  • ‘Structured products: USPs; Evidence; Need; & Cognitive biases’.  Please click here to access the PDF version.

  • MONEYFACTS Q&A

  • Please click here to see the Moneyfacts Q&A between Chris Taylor and Anthony Villis, MD of First Wealth, chartered financial planning firm of the year 2022, discussing the white paper.

  • REGISTER FOR VIDEO WEBINARS

  • Please click here to register to participate in one of the live CPD-accredited video webinars that we are running throughout 2022.

  • ONLINE TEST

  • Please click here to test your knowledge of the white paper – required for CPD purposes.

  • TALK TO US

  • If you would like to discuss our white paper or any aspect of structured products and everything that we are doing differently to ‘redefine structured products’, please call us on 020 7391 4551 or email info@tempo-sp.com