What is your Desire? Retail Investor Preferences in Structured Products

Abstract

We conduct a choice-based conjoint analysis to evaluate the preferences of private investors with regard to the investment in structured products, especially discount certificates. Investors consider the costs and the product structure to be most important, whereas the product’s issuer and information on risk are of less interest. Their preferences depend on their (self-evaluated) expertise: while inexperienced retail investors concentrate on costs, experienced investors pay more attention to the product structure. Furthermore, buyers requesting further information on discount certificates before investing leads to an increase in the relative importance of product structure as a factor in their choice.

Keywords: Structured retail products, regulation, retail investor preferences, cost disclosures, risk presentation, choice-based conjoint analysis

JEL Classification: G11, G18, G41