Before you hit the easy button, remember these 5 things:
▶️ Liquidity has a price. Trading all day is nice, but it may mean weaker terms than “over-the-counter” structured notes. Compare the terms before you buy.
▶️ Know how the fund works. Most are ’40 Act funds and gains and losses from the portfolio flow to your client. Check the counterparty risk—who the fund relies on for options or swaps actually matters.
▶️ Check the underlying. Is it a well-known stock index, or a custom index you’ve never heard of? Take a minute to find out so you can explain it to your client later.
▶️ Don’t assume it’s cheap. Not all ETFs have the same costs. Fees and embedded expenses can vary. Compare funds—and compare them to other alternatives.
▶️ Great tool, but not a magic wand. Outcome ETFs can add downside protection and income-like features but some client goals may need customization that funds just don’t offer.
Do your homework, know the risks and compare it to alternatives like structured notes before you press the easy button.
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