What’s Ahead:
- Talking about investment risk is never easy.
- Structured Notes can help manage some of the emotions of investing.
Kicking off client conversations about investment risk has never been popular. And unless your client is a “quant” or manages a hedge fund, that probably won’t change anytime soon.
While risk means something different to nearly everyone, a recent survey by French investment manager, Natixis, sheds some interesting light on how individual investors and advisors view risk. For the most part, investors and advisors agree across most possible definitions.
For advisors who use Structured Notes, leaning into the idea of risk has been a hidden little advantage. Because Notes can be structured to take advantage of both up and down markets, they can be an effective all-weather investment.
To be clear, Structured Notes don’t make investment risk magically disappear. But they can help manage some of the behavioral or psychological biases investors exhibit when talking about risk and volatility.
NewEdge Wealth’s Chief Investment Officer, Cameron Dawson, explains that volatility isn’t just about better returns. It’s also about managing the emotional roller coaster of investing. Because Structured Notes can take advantage of down markets as well as volatility, they have the potential to help reframe conversations toward seizing opportunities, not simply thinking of volatility as a burden to bear. Check out Cameron’s full take on using Structured Notes to help retrain client conversations for taking advantage of volatility, not simply living with it.
Structured Notes have complex features and may not be suitable for all investors. They are sold only by prospectus and investors should read the prospectus and pricing supplement carefully before investing as they contain a detailed explanation of the risks, tax treatment, and other relevant information about the investment. The tax treatment of structured notes varies depending on the offering, and can be uncertain in some cases. Structured products are sold through financial professionals, and investors should consult their accounting, legal, and/or tax professional before investing.
Please see our other important disclosures.
