It’s not difficult to understand why some investors are attracted to structured products. They have long been marketed as providing the best of both worlds; combining growth potential with capital protection.
Whether you are a first-time investor or simply want to streamline your funds and shares, an investment platform might be a good option for you to begin with if you plan to invest in NEBA’s structured products.
What is an investment platform?
An investment platform is a service that is used by intermediaries (such as financial advisers) and sometimes investors, to buy and sell a range of investments within the wider investment markets.
Investment platforms are seen much like a traditional supermarket that sells a range of goods – It allows you to buy and sell from a range of different investment products, like structured notes, mutual funds, exchange-traded funds for example, all in one place.
As well as providing facilities for investments to be bought and sold, investment platforms are often used to aggregate and arrange custody of customers’ assets.
How do I choose an investment platform?
Choosing the right platform for your investments is important because each platform will charge you for the services it offers in different ways. The charges you pay will eventually add up into the total return that you make on your investment. Finding the most affordable and best platform for you will depend on the services that you prefer, as well as the type of products you want to buy, hold and sell, and how often you trade. Below is the list of investment platforms most widely used amongst the clients NEBA work with:
- Investors Trust
- RL 360
- Old Mutual
- Providence Life
- Custodian Life
- Friends Provident
How much can I expect to pay for a platform?
Charges will vary for the different types of products you can invest in. All platforms will charge for buying and selling of shares, investment trusts and other products that are not funds, but the dealing fees and structure of these varies.
If you are only buying and selling funds, some platforms will allow you to do this for free. However, the cost of buying and selling them is likely to have been bundled into other administration fees. Some platforms will charge you a flat fee for their services and others a percentage of the investors’ holdings.
Do I need a financial advisor if I know how an investment platform works?
If you are an independent investor who prefer to invest without getting the advice from a qualified professional, you will find it cheaper to cut out the “middle guy” (IFA) and open an online platform account yourself. While the cost trimming strategy usually pays off in many areas of life, this is not necessarily the case when buying an investment. At NEBA Financial Solutions, we highly recommend the service of a professional financial advisor.
Why it’s important to seek a professional advice from an Independent Financial Advisor (IFA)
1. NEBA Financial Solutions only offer generic investment recommendations and these recommendations do not constitute a personal recommendation or investment advice. When recommending a structured product, we have not considered any of your personal circumstances or your investment objectives. This is the reason why our products are only available through IFAs.
By identifying and prioritising your personal objectives and discussing your individual circumstances, your independent financial advisor can assist you in choosing the right product for you. Your financial advisor can also assess your attitude towards risk, identify what products are available and evaluate their suitability to your circumstances.
2. NEBA Financial Solutions is not obligated in providing accounting, legal, regulatory or tax advice. Investors can consult with a financial advisor as to these matters.
3. Investments in structured notes have certain risks, including direct exposure to the credit risk. NEBA Financial Solutions is only a broker-dealer for our structured products, hence we have no obligations for any consequential loss arising from the investment. The value of investments and the income from the investment can go down as well as up and, in some cases, you may not get back the full amount of the capital that you invested in. In this situation, your financial advisor will be able to explain to you how the investment market works and provide you with an advice when there’s a significant market drop.
4. Investment suitability must be determined individually for each investor, and the structured notes sold by NEBA Financial Solutions may not be suitable for all investors. For this reason, it’s always sensible for investors to seek a professional financial advice from a financial advisor before embarking on this investment strategy.
5. Your financial advisor can also assist you to monitor progress of your investment and providing ongoing service such as early termination of investment if your financial situation changes over time – something that perhaps consumers are not able to do it themselves especially if your assets are illiquid.
6. Choosing the right investment platform can be extremely overwhelming. Other things to consider when picking a platform include the quality of the tools and information that are available, and the type of product that you want to invest in. You also need to ensure that there’s no extra hidden fees charged when using these platforms, such as dividend reinvestment charges and transfer fees. While you might end up paying extra for the service of a financial advisor, they can also help you to save a significant amount of cash by choosing a cheaper investment platform for you.