SRP Digest: Retirement planning

More SRP Europe coverage, annuities news, product reviews, and selected insights from our newsroom this week.

We continued our SRP Europe 2024 conference coverage this week with several panel write-ups.

With more than 700 million people going into retirement over the next 10 years structured products could play a pivotal role in supporting retirement investors - Christian Probst, Munich RE

The structured products industry must tailor products to fit the profiles of investors that are getting close to retirement, said David Stuff, director at Socius Technologies, speaking during the Income and protection for retirement investors panel .

“With more than 700 million people going into retirement over the next 10 years structured products could play a pivotal role in supporting retirement investors,” Christian Probst of Munich Re Markets added.

According to Sébastien Neukom of SIX Swiss Exchange, there are around CHF200 billion assets under management invested in structured products in Switzerland, with most of the money invested in yield enhancement or delta one structures.

Neukom and Serge Nussbaumer, editor in chief of Payoff, a Swiss magazine about structured products, discussed listed products in their domestic market , which currently total around 60,000 on SIX. To cater for more ‘aggressive products’, the exchange no longer charges a fee per listing, but a fee per slot instead.

The European Commission’s plan to ban inducement-based sales of structured products could lead to a serious setback to the EU's capital markets and limit choice for consumers, according to panellists during the Navigating the regulatory landscape discussion.

Both the council and the parliament are currently looking for an alternative to the Commission proposal that is somehow less burdened with practical issues, said Eusipa’s Thomas Wulf while Micha? Karwasiński of the Polish Council for Structured Products spoke about working with local legislation to establish rules and standards for how structured products can be issued and distributed in Poland.

In other news, Luma Financial Technologies and Vontobel further expanded the Swiss issuer's offering for dual currency notes and discount certificates on Vontobel's deritrade platform.

“Effectively, we are working from a Vontobel perspective as we are providing the multi-issuer capability to the buy side,” Luma’s David Wood told SRP.

In the US, Delaware Life added three new index options to its fixed index annuity (FIA) shelf , including the Goldman Sachs Canopy Index, which targets eight percent daily volatility and caps leverage at 120%. The comes with a deduction rate of 0.50 % pa to cover servicing and rebalancing costs.

The FIA market in the US recorded sales from independent agents of US$54 billion in 2023 , up 16% year-over-year (YoY), which accounted for 56.3% of the total volume, according to the latest figures released by the Life Insurance Marketing and Research Association (Limra).

The bank channel was the number one channel for the second year in a row as fixed-rate deferred annuities were very popular, particularly with advisors at banks, Bryan Hodgens, Limra’s head of research, told SRP.

“The next channel that sold the most last year was the independent brokerage channel, predominantly on the fixed index side,” Hodgens said.

Coralium Juin 2024 , an 8.2-year structured fund on the MSCI EMU Social Leaders Select Top 30 5% Decrement Index, collected €35.8m (US$38.8m) via the Caisse D'Epargne network and branches of Banque Populaire in France while NH Investment & Securities’ ELB 2468 , which was linked to the shares of Korea Electric Power and Samsung Electronics, gathered sales of KRW106.2 billion (US$78.6m) in South Korea.

These and more products were reviewed in our product wrap roundup , which features the most interesting products that have struck during the week.

The latest instalment in our ‘Wide angle’ series , which is part of SRP Academy’s Selected Insights , focused on structured products linked to equity-indices in Europe. Their 2023 sales, at an estimated US$55 billion, were down eight percent YoY, with investors turning to stocks of quality instead of less concentrated indices.