SPA to preface distribution summit in New York with one-day training program

By Emma Trincal

New York, Oct. 18 - Education feeds the conversation, which led Keith Styrcula, chairman of the Structured Products Association, to organize a one-day training program on structured products on Monday, the day before the SPA Distribution Summit in New York.

"The SPA looks at this as a crucial first step in developing a common approach to educating professionals, regulators and reporters in the investment strategy of structured products," Styrcula told Prospect News.

"It's an important response to some of the issues raised by the regulatory community following the significant growth of structured investments."

Convenient timing

"We've had three previous workshops. All have been highly successful," he said.

It's only the second time the workshop will be held just before the conference, a formula that Styrcula hopes will help his educational initiative build up momentum.

"We thought that doing it around the conference was a good idea," said Eric Greschner, founding partner of Your Financial Coaches and Regatta Research & Money Management, LLC and one of the instructors.

"People go from out of town. They can go ahead and book for the workshop as well. It's very convenient, and it just makes sense."

Greschner said that he had with Styrcula and the other organizers and instructors conversations on expanding this one-day workshop into a two-day or three-day event at some point.

"But for now the idea is for instructors and attendees to get together and begin the process by establishing a constant and stable curriculum," he said.

Compact curriculum

The SPA's single-day training program will cover a wide range of topics including market and asset allocation issues, case studies and pricing, rating, taxation and regulatory issues. The SPA will use a faculty format, breaking up the curriculum into several modules that will be taught by four instructors.

Held at the offices of law firm Morrison & Foerster in New York, the workshop will feature the perspectives of two industry experts, Greschner and Tim Mortimer, who is managing director of Future Value Consultants, a research and analytics consultancy specializing in structuring products.

The two other instructors, Lloyd Harmetz and Remmelt Reigersman, are both from Morrison & Foerster. They will provide legal, regulatory, compliance and tax perspectives.

At press time, participation was limited to 20, Styrcula said.

"We want to have enough people for a nice conversation but not so large so that you lose the collegiality, the coziness and the informality of the class. We want people to feel comfortable asking questions," said Greschner.

"The course provides a detailed roadmap of the economics, the regulation and the strategies of the domestic and global structured products industries," said Styrcula.

Building blocks

While a day seems short for getting an education in structured products, Mortimer said that a lot can be accomplished during the workshop.

"You can certainly cover a lot of material, from the theoretical point of view, to what's happening in the marketplace as well as get a perspective on pricing and structuring. We have a lot of content for the class attendees, including presentations, statistics and charts. There will be a diversity of topics and materials," he said.

Mortimer said that the "students" in the workshop tend to have some experience in structured products, although they are not expected to be experts.

"We'll have financial advisers but also a lot of people coming from the marketing and compliance side. It's for people who want a productive way to enhance their knowledge in structured products," he said.

Mortimer said that he will go over the nuts and bolts of the business, exploring how structured products are built, how much they cost, what the most common types of structures are and how to read a prospectus. He will also cover ratings, which he will discuss in the afternoon in the context of the presentation of his new website.

"The main idea is to help users understand how structured products work from an investing, pricing and structuring standpoint," said Mortimer.

Solving problems

Greschner will focus on providing solutions for common financial planning, portfolio management and asset allocation problems.

He said that in lectures on structured products he attended in the past, too much of the curriculum was devoted to "features" and not enough on "how to use the tools" structured products offer to help financial advisers solve specific problems they may have.

He said that he will introduce a "toolbox" with "12 tools" designed to solve specific market or asset allocation issues.

"On asset allocation, for instance, one of the common problems financial planners face is which asset allocation, when and to what percentage?" he said.

"That's at the core of the asset allocation dilemma.

"I'll explain how structured products can be the No. 1 tool available to resolve these challenges. This will give me an opportunity to discuss rainbow structures, for instance," he said.

Other "tools" may include how to minimize "market entry or market exit risks," or discussions on market timing structures.

But one of the "big ones" is the search for yield as planners struggle to put together retirement plans for their clients in a low-interest-rate environment.

"The traditional fixed-income instruments are not yielding enough cash flow in order to meet retirement needs," he said.

"What are the tools to enhance retirement income for the clients?

"Another problem is we live in a high-volatility and low-interest-rates world. How do you cope with that?"

Finally Greschner will talk about behavioral finance and how to integrate emotions such as fear and overconfidence in everyday investment decisions.

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