INVESTORS wondering whether they should sink their money into a structured product will soon get some help from the Securities Investors Association of Singapore (Sias).

The body, which champions the rights of small investors, has compiled a list of 10 key questions investors should ask financial advisers before buying a product.

Its initiative comes on the heels of complaints of mis-selling of now worthless structured products linked to failed investment bank Lehman Brothers.

The Sias questionnaire aims to help investors assess their own investment goals and risk appetites to find out if a product is suitable for their portfolios.

First, an investor should ask to be put through a financial health check so that his adviser can determine his financial standing, risk profile and investment needs. He should provide information honestly and readily so that no unsuitable products are recommended, said Sias.

Investors should also ask about the risk level of a structured product before focusing on its expected returns. This includes assessing counterparty risk and default risk.

As for returns, investors should be familiar with the conditions attached to the payment of returns. Attractive past returns are of 'not much use' if there is limited certainty that they will be replicated, said Sias.

If investors are still interested in the product, they should ask their advisers how the product fits their investment needs and whether it goes well with their existing investment portfolios.

Also, investors must find out what sort of fees the financial institution and its sales staff are earning on the product, as this could throw light on potential conflicts of interest.

Lastly, investors should ensure they receive regular product updates, find out about their exit options and fees, and take time to go back and consider the product before deciding whether to buy it.

Apart from the questionnaire, Sias will also work with financial institutions to establish a risk-rating system on all structured products, as well as produce an investment handbook to help investors understand the nature of financial products.

This article was first published in The Straits Times on December 18, 2008.