Troy Dixon discusses the history and benefits of structured products as a tool for consumers and investors.

1. T H E P A S T , P R E S E N T , A N D F U T U R E O F
S T R U C T U R E D P R O D U C T S I N A M E R I C A
T R O Y D I X O N

2. Many people blamed structured
products for the financial crisis of 2008
though the real fault lies within loose
underwriting standards and corporate
greed. This lingering association, while
no longer completely accurate in the
here and now, is a large hurdle to
overcome.

3. The reality is that structured
products have changed. Rules
and regulations have been set to
mitigate the risk of the financial
crisis, while the benefits (that
always existed) are being
rediscovered and repurposed.

4. Part of this shift comes from
the increasing focus on
providing investors with more
transparency. Another part
comes from being able to look
at the crisis (and by extension,
structured products) in
hindsight. Let’s take a look at
the past, present, and future of
structured products in America.

5. S T R U C T U R E D P R O D U C T S A R E S T I L L D O I N G
R E P U T A T I O N A L D A M A G E C O N T R O L

6. Recently, there has been a shift in rules and regulations. Now, laws
dictate that investors receive more clarity prior to making the investment,
for example having access to the estimated value disclosures. The goal
here is simple: put rules in place to help prevent another disaster.

7. Most institutions have realized that the best defense on the reputation of
structured products is a good offense. They are helping their customers
understand exactly what structured products are, how they work, and
why, when used correctly, they add depth to an investor’s portfolio.

8. H O W S T R U C T U R E D P R O D U C T S H E L P
E V E R Y D A Y A M E R I C A N S

9. Structured products work on the principle that the cash flow depends on
the performance of underlying assets. By definition, a structured product is
any product that derives its value from an underlying asset. This works for
both the financial institution and the customer.

10. The model of structured products makes the banks more willing to lend
out money in the first place. Without structured products, consumers
would likely face significantly higher rates or perhaps not be considered
for loans and mortgages at all.

11. The world has certainly learned many lessons about the risks of structured
products, and those risks shouldn’t be taken lightly. But we must not
forget that “structured product” encapsulates a huge range of varying
products. They can give an investor customized exposure to assets that
they might otherwise not have been able to access.

12. F I N A N C I A L B E N E F I T S F O R I N V E S T O R S

13. Structured investments can help investors tap into markets or asset classes
they’d have otherwise not been able to access. Because structured
products have predefined returns, we’re able to participate in emerging or
overseas markets while shielding from risks. The variety of choice also
offers flexibility to diversify the portfolio.

14. By nature, structured products are able to offer some form of capital
protection, depending on the anticipated amount of return. Investors are
typically able to protect their initial investment from any market
downsides while still being exposed to upside potential.

15. T H E F U T U R E O F S T R U C T U R E D D E B T : A
S A F E R , S T R O N G E R C O M E B A C K

16. Initially, securitization was part of the problem. But that doesn’t mean it
can’t be or hasn’t been part of the solution. *For instance, the Federal
National Mortgage Association (FNMA), which is a Mortgage-Backed
Security (MBS) is currently valued at approximately $100.*

17. Several years later, we can look back at the financial crisis with fresh eyes.
That also means being in a better place to analyze the benefits and
drawbacks of structured products. Now, we have to be sure to take
advantage of the benefits while buffering against the risks.

18. F O R M O R E I N F O R M A T I O N
P L E A S E V I S I T
T R O Y D I X O N . C O M