Principal Protector

“Keith was a visionary and totally out in front in the U.S.: before anybody else, he saw that structured products were going to be very, very important here,” says Anna Pinedo, a partner in the law firm Morrison & Foerster who liaises with Styrcula on SPA initiatives.

What he envisioned was “the inevitable convergence in the U.S. market — as there is in Europe — of structured products technology and mutual funds and other investments, and the ability to deliver this to the mass retail investor. Now,” he says, “these products are finding their way into closed-end funds and ETFs.”

The approximate $100 billion SPs market is of course tiny compared to that of mutual funds. But the instruments’ “growth has been phenomenal,” says Styrcula, “and there’s the opportunity to double in value every 18 months.”

Still, confusion reigns as to just what SPs are and what they seek to accomplish. “There’s a lot of misconception that structured products are an asset class,” notes Styrcula. A key SPA goal is to position SPs as a distinct investment class. This fall SPA will offer advisor seminars and tutorials about structured investments’ risks and rewards.

Forward-thinking advisors began recognizing SPs’ value during the 2001-2004 market, when they relied on the enhanced investments “to repair portfolios,” says Styrcula. “If you had used structured products, you would have outperformed many conventional investments because the market was going sideways.”

SPs are usually created by large brokerage firms and based on specific investment themes. They are then sold to multiple investors such as independent broker-dealers. But the products are also “very customizable.” And resilient. “They’re able to take advantage of changes in the market relatively quickly. They can protect against the downside and take volatility out of the portfolio.”

Rochester, N.Y.-born, Ithaca, N.Y.-bred, Styrcula as a teen dreamed of becoming a Hollywood filmmaker. But after scoping out the industry, he decided instead to invest his creativity elsewhere and with a BS in business from Ithaca College, enrolled in the Fordham University School of Law.

In 1991 he began as a derivatives attorney at Credit Suisse First Boston in New York City, six years later moving to SBC Warburg, before its merger with UBS. By 2000, he was back at CSFB, where he introduced a structured products platform for the firm’s DLJ Private Client Services Group.

He set up SPA in 2003, joining JPMorgan Chase a year later. While the firm was busy figuring out its SP strategy, Styrcula decided to pick up his “Rolodex and build [his] own client list.”

His mission for SPA is to promote SPs and educate the industry about them. From 600, the Association has grown to 2,300 members worldwide. “I saw an opportunity to create a sense of community,” says Styrcula. The group’s third annual conference is set for October 15-17 in New York.

Ever on the edge, this visionary who gets things done sees “a titanic shift” coming. “In the next couple of years, structured products technology is going into 401(k) plans, college savings plans, pension assets, foundations — because if you can protect principal and still give relatively most of the upside to investors,” he says, “it’s a tremendous value proposition.”

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Freelance writer Jane Wollman Rusoff is a Los Angeles-based contributing editor of Research and is the founder of Family Star Productions.