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How we design and develop a new Plan

Targeting a specific client, need and opportunity


With the experience of Societe Generale’s investment bank driving product design, the scope for developing a new product is virtually limitless. This means that we have to be particularly vigilant in making sure that any new Plan is based on a real customer need, is focused on a specific target audience, and can be clearly understood by all parties involved in the sales process.


The product design committee

The first step in the process is to bring together the sales, structuring and compliance teams from at  across Societe Generale. The purpose of this committee is to determine whether the Plan is suitable for the intended audience and there is a genuine demand. This is the reason why surveys on Financial Advisers are systematically organised to get a better understanding of the customers needs.


Defining the target audience

We have a strict product development process which is governed by a separate compliance and legal committee to maintain an objective view. The key starting point is to assess who the product is intended for, and just as importantly, if there are any clients that it is not suitable for. What is the level of knowledge in finance required to clearly understand how a particular product works.


Is there a better way of achieving the same aim?

Having a clear and defined target audience for the Plan is a good start, but it is not enough to guarantee that it will make it to launch. With a significant number of investment possibilities, any new Plan must demonstrate a clear benefit that is not currently catered for.

If the same objective can be met in a less complicated, cheaper or lower risk product that is already available in the market, we will go back to the drawing board and challenge the principle of the Product such as is the payoff scenario a reasonable assumption? Does the potential gain justify the risk that the investor will be taking? This is an important step as it ensures that only the most beneficial ideas will make it to market.


Financial Advisers are a key part of the process

Societe Generale is very fortunate in having an award winning research team, and world leading capabilities in equity derivatives. This means that we are well equipped to create a meaningful investment proposition. However, we don’t just rely on our own expertise. We make sure that we involve a number of Financial Advisers in the process to make sure that what we are thinking is in line with what clients are requesting. Before launching any new Plan we test the idea with a selection of Financial Advisers to ensure that the products, marketing materials and training aids are appropriate. Even before we get to the committee stage, we will canvas the opinion of a number of Financial Advisers for a number of product ideas to make sure the one we take to development is the right one for their clients.


Testing the theory

Each step described is great in theory but does it work? A series of Back Tests and Stress Tests are organised before launching in order to assess the real return potential and to ensure that the Plan behaves as expected under extreme conditions. In particular, the selected solution must have to demonstrate a significant chance to beat the fixed free rate cash return on a long term basis.


Are the costs fair and easy to understand?

A core tenet of the Retail Distribution Review is the suitability and transparency of costs and fees. Where the product needs to charge a fee, or involve specific charges, they must be appropriate to the service provided. If they are, we will make sure that it is easy for investors to assess the true cost of investment, and that nothing is hidden away.


Is the marketing clear, fair and not misleading?

The days when a marketing department’s key role was to communicate the benefits of a given investment are long gone. It is the job of the marketing team to make sure that promotional materials are up to the job and promote the benefits, risks and costs of an investment clearly. Technical jargon is increasingly being replaced with plain English as it is essential that not only the adviser, but the end investor fully understands the product they are investing in, who they are investing with, what the inherent risks of the product are, and how much they are paying for the opportunity.


Is the Plan easily accessible and liquid?

The last step is to make sure that the product can be traded. This doesn’t just mean ‘can advisers buy the product’, but can they sell it back too. providing weekly tradeable prices throughout the Investment Term, we can be sure that our products meet with the FCA’s 6th TCF outcome that clients must not face unreasonable post-sale barriers to change products.

 

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The potentials information or material about financial instruments on this website are provided for general information purposes only and should not to be construed as a solicitation or an offer to buy or sell any financial instruments, or any substitute for any form of advice or recommendation with respect to such financial instruments.

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The Plans described within this website are not suitable for everyone. Investors’ capital is at risk. Financial Advisers should not advise their clients to invest in these Plans unless they understand their nature and the extent of their exposure to risk.


The value of these Plans may be exposed to fluctuations in rates of exchange, and these may have an adverse effect on the value or price of the Plan. Information in the website on past performance cannot be relied upon as a guide to future performance. The value of these Plans can go down as well as up and investors may get back less than their initial investment.


This disclaimer cannot disclose all the risks and other significant aspects of the Plans. You should study the risk factors attached to these products that are disclosed below and throughout this website.


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Key risks for Investment Plans

 

Capital is at risk and investors could lose some or all of their capital.


If SG Issuer and Societe Generale were to default or become insolvent, the products will terminate immediately. The amount that your client receives back for their investment will depend on i) the market value of their Investment at that time and on ii) the value of the collateral assets at the time of expiry and your client may receive back less than your initial investment.


Liquidity risk: Societe Generale aims to provide a secondary market for the products during the investment term. However, certain exceptional market circumstances may have a negative effect on the liquidity of the products, and even render the products entirely illiquid, which may make it impossible to sell the products and result in the partial or total loss of the invested amount. There is no liquid market on which these products can be easily traded, and this may have a material adverse effect on the price at which these products might be sold. Therefore, the investor may lose part or all of the invested amount.


As with all similar structured investments, in the event of Counterparty or Issuer insolvency your client will not have recourse to the Financial Services Compensation Scheme.


Market risk: The products may be subject to significant price movement at any time before maturity, which may in certain cases lead to the loss of your entire capital invested.

 

 

Key risks for Deposit Plans

 

If Societe Generale Hambros Bank Limited becomes insolvent or fails to repay the amounts due, you could lose some or all of your initial deposit and any gross return owed to you on the Plan maturity Date. As with any deposit, if the Deposit taker fails to pay or becomes insolvent you may be eligible to claim under the UK Financial Services Compensation Scheme (“FSCS”) up to the scheme limits. For further information visit www.fscs.org.uk


In order to provide the performance of a Deposit Plan, the Deposit taker will enter into a linked transaction with Societe Generale. In the event an ‘Extraordinary Event’ were to occur whereby for example, Societe Generale becomes insolvent, and the Deposit taker was unable to match the terms of the linked transaction with another provider, the Deposit taker may not be able to maintain the returns or income stipulated for a Deposit Plan. In such circumstances the income or return investors receive from a Deposit Plan may be less than the headline rate. The investor’s Counterparty Risk with Societe Generale relates only to the terms of the income or return which can be offered by a Deposit Plan. The solvency of Societe Generale has no effect on the actual deposit.


Market risk: The deposit Plans may be subject to significant price movement at any time before maturity. If you were to withdraw from the Plan early you could get back less than your initial deposit.

 

 

Suitability test

 

The purpose of the suitability test is to ensure that the products and services offered meet the client’s investment objectives. In addition, it ensures that the client shall be able financially to bear the risks of the investment (including any relevant loss of capital) and that the client has the necessary experience and knowledge to understand these risks. When providing personal recommendations in relation to these Plans each Financial Adviser is required to and must have undertaken a suitability test and must only recommend products and services that are in accordance with the results of the suitability test.


Please note that Societe Generale does not provide investment advice.

https://www.handbook.fca.org.uk/handbook/COBS/9/

 


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