CUSTOMER AGREED REMUNERATION - CRA International
CUSTOMER AGREED REMUNERATION - CRA International
CUSTOMER AGREED REMUNERATION - CRA International
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REPORT BY <strong>CRA</strong> INTERNATIONAL<br />
5.1.2<br />
From a cost benefit perspective this will result in a transfer from one group of customers<br />
to another group of customers with no net effect. However, CAR is unlikely to reverse the<br />
trend for IFAs to serve lower value clients continuing the trend to serve fewer of these<br />
clients over time. This may be partly offset by clients being more confident in the industry<br />
and less resistant to following their adviser’s recommendation.<br />
Quality<br />
There are two main ways in which the quality of services offered by advisers is likely to be<br />
impacted. First, and the most significant change in consumer behaviour resulting from<br />
CAR, customers stated that they would ask intermediaries to explain the services they<br />
offer. Figure 16 below, shows that 84% of customers “would ask what I am getting for<br />
this amount”. This is an action of relatively low cost for customers since it arises when<br />
they are seeing their existing adviser. This might be expected to lead to greater<br />
competition over the price for advice although 59% of consumers agree that negotiation<br />
over price would be difficult because of not having clear expectations about the amount to<br />
pay.<br />
Figure 16 Changes in customer behaviour due to CAR<br />
I am more likely to shop around for an adviser<br />
It would be difficult to negotiate the price for advice as I<br />
have no idea what amount to expect to pay<br />
I would ask what I am getting for this amount<br />
I would ask him to provide services over time<br />
I would stay with my adviser but try to negotiate the<br />
price<br />
I would ask to pay a fee<br />
0% 20% 40% 60% 80% 100%<br />
Agree strongly Agree slightly Neither agree nor disagree Disagree slightly Disagree strongly<br />
Source: <strong>CRA</strong> <strong>International</strong> based on customer survey of 209 purchasers conducted by ORC <strong>International</strong>.<br />
Second, we would expect this to lead to greater clarity regarding the services that the<br />
consumer should expect, with the result that advisers are much more likely to provide<br />
such services. This may be particularly useful regarding ongoing advice.<br />
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