Wealth and asset management firm Robert W Baird & Co is continuing to see an uptick in its sales of structured certificates of deposits (CDs). Its monthly sales figures currently stand between $1m and $3m, it said.
Appetite for structured CDs continues to increase and advisers are becoming less bearish: "There's a steady, growing appetite for structured products that don't have a barrier on the upside," confirmed director Cory Colvin. There is also a bias toward shorter terms, for example 22 months, he said, though it is hard to structure such tenors in a low interest rate environment.
The most-popular structured CDs are linked to the S&P500 or Dow Jones Industrial Average, with the Russell 2000 as a third choice of underlying, including some commodity-linked and Bric-linked products. A few gold-linked CDs have also been sold recently.
Baird proffers products from multiple issuers to its growing network of 600-plus financial advisers. It has made a concerted effort to recommend market-linked, fixed-income products over bonds as a conservative portfolio allocation. "We show it as a different way to gain access to an index," said Colvin. The firm started issuing structured products in 2007.
To be eligible to recommend market-linked CDs, Baird financial advisers must have successfully completed specialised training. Of those 125 or so advisers who are eligible, 20% sell roughly 80% of the structured investments, Colvin stated. Some advisers go whole hog, while others will sell an occasional CD, he said.
"We have made it through a very challenging period of time unscathed, with no negative outcomes," said Colvin. The firm is seeking measured growth and has no desire to ratchet up risk for investors, he added.
Baird has been on a hiring spree. Its private wealth management group hired 132 wealth managers in the first half of 2009, many of them industry veterans who are familiar with structured products. It has also opened four new private wealth management offices, one each in the Maryland cities of Baltimore and Easton, and the California cities of Sacramento and Grass Valley. A San Francisco office is being planned.