Market Perspective
  •  3/23/2021

Let’s Speak the Same Language

By SIMON

SIMON’s innovative, scalable framework solves industry wide challenge

The U.S. structured investment market is diverse, full of choice and opportunity for investors with wide-ranging objectives.  While the inherent diversity in design makes these investments go-to tools for many financial professionals, it has historically also made product search and selection a challenge.  With many major financial institutions issuing structured investments, and a seemingly infinite number of strategies to choose from, inconsistent terminology across offerings has sometimes led to confusion for wealth professionals and investors alike.

The Challenge

This is one of the challenges that led to the creation of SIMON, a digital platform for risk-managed solutions that today serves more than 85,000 financial professionals. Since the inception of the U.S. structured investment market, financial professionals have often criticized a lack of standardization in the marketplace for limiting their ability to:

  1. Fully understand features across products in a diverse marketplace
  2. Analyze which investments best meet client needs
  3. Clearly communicate value propositions to clients, and
  4. Manage investments post-trade

In order for structured investments to be fully understood, product education would be necessary, but in order for structured investments to be clearly explained, market participants would need standardized terms to describe how structured investments work.

The Solution

An industry first, SIMON set out to build a unified language with streamlined categorization of structured investments, leveraging technology to build a scalable, industry-wide solution.

Together with leading issuers, SIMON led a collaborative approach to create a structured investment nomenclature that is compatible with the way financial professionals interact with clients and has been adopted by 50 wealth management providers, including some of the largest in the country.

Timur Kocaoglu, Chief Operating Officer at SIMON, highlights the importance of this initiative: “Standardizing and streamlining naming conventions has empowered financial professionals to better understand structured investments and how they’re used in portfolios while reinforcing a goals-based approach to wealth management with clear and consistent client communications.”

The Approach

SIMON’s nomenclature was developed to bring clarity to the marketplace by organizing the many pay-off and protection profiles that exist into clear, consolidated categories.  It provides a pathway to categorize structured investments based on four core product attributes:

These twelve product categories help financial professionals approach structured investments using investment-oriented terminology, screening for their client’s main objective, risk tolerance and preference for packaging and callability.

Since many investment types exist within each of the twelve resulting product categories, a second layer of standardization is used to describe the product features, including payment and protection types:

The Benefits of Speaking the Same Language

This streamlined combination of product classification and payment/protection types ultimately defines each product. Unifying structured investments under the umbrella of a single, common framework, this approach has been designed to:

  • Deliver greater product transparency
  • Evolve with the market as new product features are introduced
  • Set scalable standards for industry-wide adoption

A framework built to last and to improve decisions – that’s innovation in and of itself!

Today, SIMON’s innovative platform delivers a common language, with standardized nomenclature and product categories adopted by all 20 issuers on the platform.  This standardization is carried throughout the SIMON Marketplace, spanning thousands of new and active structured investment offerings.  Financial professionals using SIMON’s platform for structured investments now experience seamless market entry, investment access and analysis, and complete lifecycle management—a user journey that was previously not possible.

Want to see it in action and learn more about managing market risk with confidence? If you’re a financial professional, contact us for a demo and if you’re an investor, ask your financial professional about SIMON.

You can also learn more about structured investments and how they can help keep clients invested over the long term with articles and videos available on simon.io/engage.

©2021 SIMON Markets LLC. All Rights Reserved. | 2021.03 This is not intended to be an offer or solicitation to purchase or sell any security or to employ a specific investment strategy. The market scenario analysis and other information regarding the likelihood of various investment outcomes are hypothetical in nature, do not reflect actual investment results, and do not guarantee future results. Results are generated with the benefit of hindsight through the retroactive application of certain parameters and assumptions. Before investing in any product, you should review the prospectus or other offering documents, which contain important information, including the product’s investment objectives or goals, its strategies for achieving those goals, the principal risks of investing in the product, the product’s fees and expenses, and its past performance. Securities products and services offered by SIMON Markets LLC, a broker-dealer registered with the U.S. Securities and Exchange Commission, a member of FINRA / SIPC. Annuities and insurance services provided by SIMON Annuities and Insurance Services LLC. Please visit www.simon.io for complete disclosures, including terms of use and privacy policy.

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