About reservations: general background regarding structured product offer periods and reservations

Reservations are an important aspect of the way that the structured products sector operates.

As a plan manager, we always do everything we can to keep the offer periods for our product suite open until the scheduled close dates, with the aim of accommodating all applications to invest in our plans from professional adviser’s clients.

However, there are various factors which can affect a plan manager’s ability to keep offer periods for structured products open, including stock market conditions.

In scenarios where we need to close an offer period for a plan / plan option early, we typically try to offer follow on plan options for professional advisers to use, either as a ‘Part 2’  of the same product suite, or as a subsequent issue of our product suite when it is launched.

Where we have to close an offer period early due to stock market conditions, the terms of any follow on plans / plan options will usually be lower, reflecting the changes in stock market conditions which meant we were unable to keep the previous issue open until the end of the offer period.

With these points in mind, we offer professional adviser firms the opportunity to arrange reservations with us, so that their clients should be able to access a particular issue of our product suite and secure the terms of specific plans / plan options.

Arranging reservations is good practice, which can be beneficial for professional advisers and their clients:

  • Professional advisers can confirm availability of a specific plan / plan option, for specific clients to invest specific amounts: this can be particularly important if the pricing environment is challenging and / or if dealing with a significant number of clients and / or significant investment amounts.
  • Reservations can assist us in managing the available assets and pricing / terms for our plans / plan options throughout their offer periods: this can help us in our aim of accommodating all professional adviser’s clients and investment applications into our plans.

It is pertinent to highlight a little more about the way that structured products sector, plan managers and structured product offer periods operate:

As explained, stock market conditions and other factors during an offer period may mean that it is difficult and sometimes simply not possible for plan managers to keep offer periods for structured products open until the scheduled offer period close dates, meaning that offer periods for structured products can occasionally close early.

However, what many plan managers are slightly less forthcoming in explaining is that if stock market conditions can deteriorate during an offer period, such that it is difficult to maintain the terms of a product suite and keep offer periods open, clearly there can also be circumstances when the opposite applies: there can be times when stock market conditions may improve during an offer period, such that it could be possible to improve the terms of structured products for investors.

Our unique ‘Stated terms or better’  pledge is designed to operate in such circumstances, allowing us to improve the terms of our plans above the terms stated in plan brochures, if stock market conditions and other factors during an offer period mean that we can do so.