CUSTOMER AGREED REMUNERATION - CRA International

CUSTOMER AGREED REMUNERATION
less than 25% thought this would increase trust. However, this needs to be put in the
context that only 50% of intermediaries believe there is a problem of perception resulting
from commission based remuneration.
2.3 Impact of CAR on demand for financial advice and products
There are a number of different ways in which customer behaviour could change in
response to CAR including shopping around and requesting an explanation of the service
that customers receive – these are examined in section 5.1; here we focus on the impact
on the quantity demanded.
Around 50% of purchasers agreed that CAR would make them more likely to follow their
adviser’s recommendation (less than 20% disagreed with this statement). These
consumers were then asked what course of action they would take in response with the
results presented in Figure 5.
Figure 5 Impact on demand from consumers
35%
30%
25%
20%
15%
10%
5%
0%
Invest more Visit your adviser more often
Note: This result is based on the 102 purchasers who state that CAR would make them more likely to follow their
adviser’s recommendation.
Source: CRA International based on survey of 209 purchasers conducted by ORC International.
As is clear from Figure 5, 10% of those who would be more likely to follow their adviser’s
recommendation would invest more, which represents 5% of all purchasers. Similarly,
over 30% of purchasers who would be more likely to follow their adviser’s
recommendation (15% of all purchasers) state that they would want to visit their adviser
more often. These reactions suggest that there will be an increase in demand for both
products and advice. Whether such demand for advice would actually be realised will
depend on the reactions of intermediaries to CAR which is considered in the next chapter
which examines the supply of advice.
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