More than 40% of Structured Product Investors Including DLF Invested Due to Sales Staff Recommendations

[Asia Economy Reporter Oh Ju-yeon] Among those who invested in structured products such as Derivative Linked Funds (DLF), more than 40% invested due to active recommendations from sales staff.

On the 30th, the Korea Financial Investment Protection Foundation announced the results of the "2019 Structured Products Investment Status Survey," which surveyed 2,530 adults aged 25 to 64 from November to December last year.

According to the survey, 158 respondents (6.25%) invested in structured products, which was lower compared to savings/deposits (91.4%), funds (26.2%), and direct investments (38.6%).

The investment ratio by structured product was highest for Equity-Linked Securities (ELS) at 65.2%, followed by Equity-Linked Funds (ELF) at 41.1%, Derivative Linked Securities (DLS) at 36.7%, Equity-Linked Deposits (ELD) at 30.4%, and Derivative Linked Funds (DLF) at 28.5%.

The foundation explained, "It appears that many individuals invest in multiple types of structured products, with ELS being the most commonly invested product."

A notable point is the influence of sales staff. About 46.8% of structured product investors, nearly half, responded that they invested in structured products due to active recommendations from sales staff at banks or securities firms.

The proportion of respondents who invested voluntarily was only 30.4%.

The foundation analyzed, "As age increases, both the rate of visiting in person to subscribe to products and the rate of subscribing due to sales staff recommendations increase. The high rate of subscribing due to sales staff recommendations indicates that sales staff have a significant influence on structured product investments."

Additionally, among structured product investors who underwent an investment propensity diagnosis at the sales company, 19.1% were recommended products regardless of their investment propensity results, and 14.6% reported that their investment propensity results were changed to match the recommended products.

Regarding this, the foundation pointed out, "Investors tend to invest in riskier products than their subjective investment propensity suggests. This may indicate a gap between investors' perceived investment propensity and the results of the investment propensity survey conducted during the sales process, or that recommendations based on investment propensity were not properly made during the sales process. It may also suggest that the suitability and appropriateness principles, which were highlighted in the recent DLF mis-selling incident, were not properly observed."

Meanwhile, the average investment amount per person in structured products was 44.42 million KRW, with amounts by age group as follows: 50s at 67.32 million KRW, 60s at 59.28 million KRW, 40s at 48.20 million KRW, 30s at 25.08 million KRW, and 20s at 15.03 million KRW.

Among investors who invested in structured products, 54.4% reported making a profit, which was higher than the 15.8% who reported losses. However, the average return rate was 13.17%, lower than the average loss rate of 15.04%.

This content was produced with the assistance of AI translation services.