Incapital’s Rhodes: new direct sales team will expand equity presence

SRP spoke to Deryk Rhodes (pictured), managing director, head of market-linked products trading & origination at the US firm, about his new role, his plans for the new team, and the opportunities Incapital is looking for in the market.

Do you have plans to expand your offering? What’s the new sales group’s mandate?

Through this new advisor direct sales group, we will be focusing our broad calendar offerings to align with the risk management culture of our distribution partners. Our mandate is to leverage the successful education, marketing and product positioning from our wholesale team into the direct sales model. We are also going to leverage our successful fixed rate offerings through the direct sales team to expand our equity offerings presence. 

What products do you think will drive demand this year? Do you have any plans around fixed indexed annuities?

We are seeing a lot of repeat investors, and each year investors are increasing their repertoire of trades. Yield products will always be a staple offering, but we think we will continue to see a growing demand for buffered notes. Investors want to participate in potential market growth, however with the recent volatility in equities we may see deeper downside protection in the short-term.

Over the last several years, Incapital has been very focused on growing and maturing its market-linked product distribution. Fixed indexed annuities [FIAs] have clearly been a growth segment and could be a potential opportunity for Incapital. Our distribution team is well equipped to distribute FIAs and partnering with an FIA issuer could provide a lot of synergies.

What’s your take on the increasing number of platforms in the US market (Simon, Luma, Halo…)?

We are very eager to have an infusion of technology in the market-linked product space. Relative to other financial product offerings, the ongoing support for both financial advisors and their clients is not as robust. We see technology adoption as critical to the future growth of this market segment. Incapital has utilised Simon for many years and we’ve seen the power of such a platform first hand.

Do you think platforms can help grow the market and educate investors about structured products?

The penetration of these powerful risk management solutions is still relatively small among financial advisors and investors within the independent and bank distribution networks. To increase penetration, education is key. It has been an intense focus by Incapital over the last several years and is a cornerstone to our value proposition and our success. Any medium that broadens the education of these risk management solutions will result in growing market share.

Where is the market going? What’s your outlook for the US structured products market?

We are very bullish and believe that investors will continue to seek risk management solutions as an ‘asset class’ in their overall investment mix. Market-linked products have the unique ability to tailor solutions to meet the specific performance goals of an investor. This is especially important as more and more individuals begin to rely upon their defined contribution nest egg.

What are the challenges your firm and the industry are facing? Is regulation impacting your business negatively?

We have a very positive outlook on our industry and the risk management solutions we are able to provide to our distribution partners and their clients. Varying market conditions are always a challenge, whether it’s low interest rates, or high equity volatility, but it’s this very challenge that we believe makes market-linked products, with their custom payout profiles, so attractive.