Common Misconceptions About Structured Notes
Jan 12, 2026
Patrick McNamara
Separating myths from reality so investors can make informed decisions
Structured notes can be powerful tools for equity exposure, diversification, and managing market volatility—but they’re often misunderstood. Much of this misunderstanding comes from misinformation on the internet or from misinformed investors, which can lead people to dismiss structured notes outright, or use them inappropriately.
Here’s a clear look at the most common myths and the reality behind them.
Misconceptions & Realities
Myth | Reality |
|---|---|
Structured notes are only for “rich” investors | Fintech platforms and broader distribution now make structured notes accessible to individuals, with some available for as little as $1,000. They can be tailored to align with personal goals and risk tolerance. |
Structured notes are too complex to understand | Core concept is simple: a bond plus an option provides defined outcomes. A fiduciary advisor can explain payoff, risk, and outcomes in plain language. |
Structured notes are risk-free | No investment is risk-free. While many notes offer principal protection, risks include market declines beyond the barrier, issuer credit, and liquidity constraints. |
You’ll miss out on market gains | Many notes provide both downside protection and meaningful returns, including full market upside or leveraged participation beyond the index. |
Structured notes can’t be sold after purchase | Many notes are tradable in the secondary market. Liquidity varies, but investors are not locked in until maturity. |
Structured notes have high fees | Structured notes typically have no ongoing management fees. Embedded option costs are included in the pricing, and structures can be more cost-efficient than comparable strategies. |
Key Takeaway
Structured notes are flexible, goal-oriented investment tools—not exotic bets for the wealthy or overly complex products for the risk-tolerant. Misconceptions often arise from a lack of familiarity or misinformation online, but with fiduciary guidance, they can be effectively incorporated into a portfolio to manage risk, participate in equity markets, and provide clarity in uncertain conditions.
At StructuredNotes.com, part of Claro Advisors, our goal is to help investors understand the realities of structured notes so they can make informed, confident decisions.
When used thoughtfully, structured notes can be powerful tools. Education is the first layer of protection.
A deeper look at the common risks and considerations can help investors separate myths from reality.
Patrick McNamara
CFP®, Financial Advisor at Claro Advisors
About the Author
Patrick McNamara, CFP® is a Financial Advisor at Claro Advisors
with nearly 30 years of experiencein the financial services industry.
He has held senior roles at Fidelity Investments, Goldman Sachs, and
Morgan Stanley. He founded StructuredNotes.com to educate investors
on institutional-style investment strategies and structured notes.
Disclosure: Claro Advisors Inc. (“Claro”) is a Registered Investment Advisor with the U.S. Securities and Exchange Commision (“SEC”) based in the Commonwealth of Massachusetts. Registration of an Investment Advisor does not imply a specific level of skill or training. Information contained herein is for educational purposes only and is not considered to be investment advice. Claro provides individualized advice only after obtaining all necessary background information from a client.
The investment products discussed herein are considered complex investment products. Such products contain unique features, risks, terms, conditions, fees, charges, and expenses specific to each product. The overall performance of the product is dependent on the performance of an underlying or linked derivative financial instrument, formula, or strategy. Return of principal is not guaranteed and is subject to the credit risk of the issuer. Investments in complex products are subject to the risks of the underlying reference asset classes to which the product may be linked, which include, but are not limited to, market risk, liquidity risk, call risk, income risk, reinvestment risk, as well as other risks associated with foreign, developing, or emerging markets, such as currency, political, and economic risks. Depending upon the particular complex product, participation in any underlying asset (“underlier”) is subject to certain caps and restrictions. Any investment product with leverage associated may work for or against the investor. Market-Linked Products are subject to the credit risk of the issuer. Investors who sell complex products or Market-Linked Products prior to maturity are subject to the risk of loss of principal, as there may not be an active secondary market. You should not purchase a complex investment product until you have read the specific offering documentation and understand the specific investment terms, features, risks, fees, charges, and expenses of such investment.
The information contained herein does not constitute an offer to sell or a solicitation of an offer to buy securities. Investment products described herein may not be offered for sale in any state or jurisdiction in which such offer, solicitation, or sale would be unlawful or prohibited by the specific offering documentation.
©2025 by Claro Advisors, Inc. All rights reserved.
For all Market-Linked Products, excluding Market-Linked CDs, the following applies: Not FDIC insured // Not bank guaranteed // May lose value // Not a bank deposit // Not insured by any government agency