SRP Apac awards: Australia’s Stropro bets on education for market growth

The Australian structured products platform secured the first place with a comprehensive editorial submission in a heavily contested category with some of the market’s heavyweights.

“We want to grow different market segments by delivering added value to our clients. One of our advantages is that we can digitally onboard multiple client types including individual investors, trust/company accounts, third party advisors, family offices, and provide best practice when it comes to suitability,” says Anto Joseph (pictured), Stropro’s chief executive.

The SRP award is really a recognition and testament to the work we’re doing - Anto Joseph

“Underpinning all that is our core focus on education. The SRP award is really a recognition and testament to the work we’re doing on the educational front which we’re tailoring to each client type in the platform. We provide the product versatility and technology they need to get involved in the structured products market.”

Stropro was selected by a panel of judges for its holistic approach to investor education which includes “a number of traditional and digital formats including email, events, seminar, webinar, online modules, as well as investor touchpoints and experiences within the platform”.

A unique aspect of the firm’s model is that it keeps the integrity of the original note from issue intact – an approach that resonates with Australian investors who want clarity and simplicity.

“Our technology and infrastructure allow us to get better terms and pass them on to advisors and end investors,” says Ben Streater (below), chief product officer at Stropro. “The Australian market is not quite as developed as some markets, and there is a huge opportunity for a firm like ours to come in and democratise the access to this market for providers and investors alike.”

The focus is on building out and developing the existing structured products market - by making the traditional structured products market more efficient and transparent, there will be more players and investors interested in participating, according to Streater.

“Our portfolio reporting module is a good example of how we’re approaching the market,” he tells SRP. “This functionality was developed to respond to a specific client need but it also improves the user experience and can give more visibility to other structured products investors in the Australian market.”

The take up of this tool is also helping Stropro build a pipeline to continue expanding its business.

“This market needs opening up, greater transparency, improving efficiency, building the reporting capabilities – this will take some time but we think this will drive new client demand and opportunities to continue developing the market,” says Streater. “We keep an eye on developments in other markets such as the annuities space or robo-advisory, and we see scope to do different things. Having a functioning platform and the technology in place allows us to tap into different opportunities. The pipeline ahead of us is quite exciting.”

How would you rate 2019?

Anto Joseph: 2019 was a breakthrough year for Stropro, and a year that set us up for a successful 2020. After securing capital funding from institutional and high-net worth investors, we were able to onboard the right team, establish our operational infrastructure and build a technology solution that we could confidently bring to market.

We launched the platform in November 2019 and we were able to demonstrate a digital end-to-end structured product investment experience. This was revolutionary for the local market and cemented Stropro as Australia’s dedicated platform for structured products.

How has responded your target market to Stropro’s offering?

Ben Streater: What has been pleasing to see has been the uptake of HNW investors utilising structured products.

The traditional Australian HNW asset allocation has been skewed to direct property, direct equities and cash, but hasn’t delivered the right risk and return objectives in recent times. This has been due to multiple factors: falling interest rates, falling dividend yields and increased market volatility (not restricted to COVID-19). Most HNWs are still focused on generating a better yield whilst not significantly moving up the risk spectrum. As a result, we have seen an increase in the appetite and use of structured products.

An interesting observation is the increased structured product appetite from Australian financial advisers who have performed transactions through our platform. We continue to educate, extract insights and execute on their desired thematics or portfolio objectives.

What is Stropro bringing to the market?

Anto Joseph: At company level, we have grown through a relentless focus on the investor. In meeting one of the biggest problems for most structured product investors, we worked in the development of a reporting tool to manage the lifecycle of product positions held outside of Stropro which we launched earlier this year. Many of these investors are in the dark and have limited visibility on how their structured products are performing. We have seen phenomenal results from launching this solution.

What’s your differentiating factor in the Australian market?

Anto Joseph: We are the first to really address, tackle and solve the inherent structured product market problems in Australia. Our deep backgrounds with structured product design, investing and distribution have equipped us with the insights required to approach it from a truly investor-centered perspective.

Our ability to take on the principles learned from previous experiences and apply these to a highly scalable technology solution has allowed us to reach and onboard investors across the country. We have the ability to digitally onboard and service multiple client types; from individuals, trusts, companies, third party advisers, family office groups while ensuring best practices in suitability.

What’s your assessment of the impact of the pandemic crisis?

Ben Streater: For HNW investors, we have seen a shift to risk aversion given uncertainties in financial markets. By focusing on education, we have built trust, which has resulted in high levels of engagement between investors and our platform.

Even though it is a difficult period for communities, as a business we have flourished by onboarding hundreds of HNW investors and accelerating our technology enhancements throughout the recent crisis.

Additionally, we are launching new technology features every two to three weeks on the platform, and our clients are very much involved in our design & develop agile model.

What is your forecast for the remaining of 2020?

Anto Joseph: We wanted to spend a good amount of time in our ‘beta’ stage. Recent traction and demand from investors has enabled us to move into our next phase which is focused on scale.

Over the past six months we have utilised a number of structured product payoffs depending on market conditions, views and demands from clients. This consisted of a range of products from traditional autocalls linked to local and global equities as well as longer dated snowball autocalls that enhanced returns in a tax effective way. Along with testing multi-currency, we also saw exciting demand from tactical opportunities such as an ASX 200 lookback option that allowed investors to ‘time the market over a three-year period.

We expect to see continued volatility for the remainder of 2020 and perhaps into early 2021, mostly due to the battle between Covid-19 breakouts and the race for a widely available vaccine. We therefore expect to see accelerated demand for our unique investment offering.

Do you have any specific plans for this year?

Ben Streater: Over the course of 2020, we will look to bring more issuers onto our panel and enhance our offering for family office groups. These groups not only require better operational and reporting infrastructure but have a significant need for efficient price discovery, which has been constrained due to the lack of technology. 

In working with financial advisers, we have seen significant demand to integrate with holistic wealth and accounting platforms. Naturally, this excites us: first, to deliver an enriched experience to our clients; second, to benefit from the distribution opportunities by embedding ourselves into Australia’s $2 trillion HNW wealth ecosystem.