In 2013, Goldman Sachs launched SIMON, or the Structured Investment Marketplace and Online Network, to provide a single online platform for financial advisors to access structured products.
In December 2018, Goldman sold its majority equity ownership in SIMON to a group of investors and, importantly, structured product issuers including Barclays, Credit Suisse’s NEXT Investors, HSBC, JPMorgan, Prudential and Wells Fargo; Goldman retains a minority stake in the company.
The benefit of the transaction, says former Goldman Sachs executive and now SIMON Markets LLC CEO, Jason Broder, is that there is now an industry-wide “single solution for structured products” for any Series 7-licensed advisor. Broder, formerly head of Goldman’s private investor products group, says the platform offers a broader range of products from multiple issuers than was offered on the original SIMON platform, where the majority of structured products were from Goldman.
While Broder says SIMON now offers structured products, beginning in the second quarter of 2019 it will expand its risk-managed offerings to annuities, starting with fixed indexed annuities, and said the company is exploring adding structured annuities to the platform.
Available through its website or as an API, SIMON provides educational, performance analysis and “the whole lifecycle of a trade,” from pre-trade education and analytics, to the actual trade and then post-trade performance analysis and lifecycle management which Broder said didn’t exist for FAs pre-SIMON.
Meant to be used by financial advisors from wirehouses, regionals and independent broker-dealers (and not retail clients), SIMON, he says, provides a simpler way for advisors to use and manage these complex products like structured notes in their books of business. While the platform streamlines the process for advisors, compliance concerns are not removed: FAs will only have access to structured products that are approved by their broker-dealer’s home office.
Since the platform offers products from multiple issuers, Broder says SIMON created a consistent language—a standardized nomenclature—that makes these complex products more transparent, providing benefits to the advisors selling them and providing more clarity on their appropriateness to the end clients who buy them. For example, pre-SIMON there could be different names for essentially the same products offered by different issuers. By working with those issuers on the platform and its investors, the standardized nomenclature, or product schema, makes SIMON’s signature post-trade performance analysis possible.
Structured products have attracted interest from regulators like the SEC—and prompted fines for distributors like Wells Fargo, Merrill Lynch, and UBS. Broder admits that these products carry risk and are complex, but argues that helped by this greater transparency, they can also provide appropriate risk-managed solutions for clients, providing “growth with some semblance of principal protection,” providing market exposure on the upside but also protection on the downside. Better educating advisors on the pros and cons of structured products, he says, helps advisors determine whether such an investment is appropriate for a specific client. However, Broder says there aren’t that many other investment products that can deliver the tailored, risk-managed solution that structured products provide.
In addition to providing easier access to the products, and a single sign-on for many of the larger broker-dealer distribution networks, Broder stresses that SIMON also provides a broad range of educational resources for financial advisors on structured products.
Broder is ambitious when it comes to SIMON’s potential reach among financial advisors. “There are about 310,000 financial advisors in the U.S.” he points out, and “we would like to target all of them.”