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COO Q&A: How Fintech Is Transforming the Structured Product Marketplace


Fintech is a rapidly evolving field. With buzzwords such as disruption and innovation everywhere, combined with new product launches, it can be hard to discern what is actually innovative and what is just extra noise. In this post, we talked to Luma Financial Technologies COO Donald Pogan about how platforms truly transform the structured product market, and how they benefit broker-dealers and reps.  

Q: There has been a lot of buzz about fintech platforms disrupting the market. How have they changed the landscape in the structured product marketplace? 

A: Right now, fintech platforms are changing the landscape by bringing about much-needed process efficiency. For example, creating product calendars has long been inefficient due to a drawn-out process that involves many back and forth emails and phone calls. Fintech platforms automate and simplify these interactions, leading to an elegant and more streamlined process. This is helping firms efficiently create customized product calendars for their advisors. 

Product accessibility is another area where platforms have made an impact, and I’m using the term accessibility in a couple ways here. First is accessibility to more product. Multi-issuer platforms present a broader range of products for advisors to source from, which leads to a better fit with their clients’ portfolio needs. But I also mean accessibility in the sense that advisors can now more easily stay on top of post-trade product events. I’m talking about things like coupon payments, knock-in levels, maturities and such. Platforms help advisors access information like this much more easily which results in better client service. 

While these changes are quite significant in and of themselves, I think the bigger impact is still coming. We’re on the cusp of a big fundamental shift that will take place over the next 12-18 months and that’s what’s exciting. That’s why the industry is abuzz. For example, as platforms continue to evolve, structured product transactions will eventually become as easy as fixed income transactions. Advisors are quite accustomed to having an advanced system that they use to research, select, and purchase products such as corporate bonds, municipal bonds, treasuries and more. If or when API integrations are developed into these fixed income platforms, structured products will become available to advisors in a very similar manner and in a system environment the advisor is already very familiar with. This is a next level wave of process efficiency that I’m quite excited about. 

Q: How have early adopters of fintech platforms benefited? How can fintech position its users for growth in the future? 

A: First, early adopters gain a competitive edge through market differentiation. For broker-dealers specifically, offering a platform to service this product enhances recruiting because they can provide reps with better access to a wider selection of products – i.e. not just mutual funds and annuities, but now also structured products – and optimize repeat sales through automated post-trade notifications.  

Moreover, having a fintech solution positions broker-dealers for growth as it adds efficiency to their processes and workflows. This efficiency goes beyond just a cost savings and improved product list. It also allows firms to enhance their processes without adding additional overhead because platforms can directly integrate into an investment firm’s workflow in areas such as order entry, product history archive and monthly offerings.  

Reps also stand to gain from fintech platforms. By using the training materials and sales tools readily available via the platform, they can better convey the value proposition of structured products. This allows for potential wallet-share growth with existing and prospective clients. Coupled with the ability to expand their product offering — essentially, placing more arrows in their quiver — they have new opportunities to attract additional client sets who previously were a challenge to obtain. 

Q: How do you think the industry will be affected by fintech platforms? 

A: Fintech platforms are going to drive significant volume growth in structured products. They’re going to change structured products from being a niche investment understood by only a few to a more widely used financial vehicle in more portfolios. That’s what the broad consensus is among the investment firms and issuers whom we interact with and it’s what we believe, too. It’s easy to see why when you not only understand the efficiencies that platforms unlock but also how they will significantly improve the accessibility of structured products to more advisors. 

Now, I think a secondary effect that may not be as obvious is a coming shift over the next couple of years in which intermediaries will need to evolve in how they provide value to investment firms and advisors. As it stands now, a small percentage of advisors know how to explain structured products to their clients. In today’s environment, having that base knowledge is enough to stand out. But as platforms become mainstream, more advisors will get comfortable with these types of investment solutions. To stay ahead, leaders of today will need to elevate their services and expertise to continue delivering differentiated value.  

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