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Ep 309: Leveraging Structured Notes To Differentiate A Highly-Leveraged $300M Solo Practice With Anh Tran

Financial Advisor Success

CHAPTER

Using Structured Notes Versus a Buffer ETF?

Every client has a unique need, right? And so for us, this is buffered a structured now notes we've been doing for over a decade now. Buffered ETFs have become more popular recently and I think that's also, and they're coming out with new ones and I have been looking at them. So we may start using them. But not at this point because we're still using our individual structured notes, but that's something that we are exploring. It almost reminds me of the distinction of advisors who like to use bond funds or bondETFs versus those of us that really like to buy individual bonds and latter.

00:00
Speaker 2
It almost reminds me of the distinction of advisors who like to use bond funds or bond ETFs versus those of us that that really like to buy individual bonds and latter, though, and that just there's some flexibility around the building blocks and how you set them up. If you're buying, if you're buying them individually versus in a, in a continuously rolling fund format, it feels like you've got a very similar framework of using structured notes versus a buffer ETF of I can buy the exact maturities. I get the assuredness of the maturity. I can get the maturity at the time horizon that I want. I get a little bit more benefits if I can buy longer terms on them because of how the structured note math works. And so just, and my word, like I feel like there's an interesting parallel there of buying lattered structured notes versus a buffer ETF similar to buying a lattered bond portfolio versus a bond ETF. Right.
Speaker 1
I see that. And I think it's, it's, it's every client has a unique need, right? And so for us, this is buffered a structured now notes we've been doing for over a decade now. And so buffered ETFs, I think have become more popular recently. And so I think that's also, and they're coming out with new ones and I have been looking at them. So we may start using them. I'm not at this point, we have not because we're still using our individual structured notes, but that's something that we are exploring.
Speaker 2
And so then just practically speaking, like how do you find them, buy them, manage them, like just, I think you said, like a lot of clients have a 30% allocation. They're regularly maturing. So you've got, you've got a repurchase role issue to deal with on an ongoing basis as well. So, so just how does that, like what tools or platformer manager using just, just to handle account?
Speaker 1
Right. And that is a great question. But that process of ours has been a constant evolving process where we're trying to make it better each time because it is such a laborious process of this, managing the notes. And so one thing that has come out recently that has been a game changer for us is Simon. So Simon is something that I think came out maybe three years ago. It's about three or four years ago. And I, they did not have this at all. And back then, we used to just have to scour the notes. So on a monthly basis, we're reviewing, we'll get our emails from the different wholesalers and look at all the different notes. And we would identify, we would go through our clients and we would go, okay, here's a client's allocation. Here's what they need to get added to their portfolio to meet their asset allocation. So now this month, we need to find, you know, a large cap international five year notes. And we want to make sure that clients have notes that mature every year. And we also want them to have notes maturing every quarter of the year as well. So it's very robust because, because the note features vary from quarter to quarter, depending on the volatility of the markets, right? So some, some months we're getting really good notes. And, and usually when it's volatile, the note features are even better. And so the last thing I want to happen is if we just have everything maturing at the end of the year, now we have to buy at one point of the year forever more, right?

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