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Designing for cost transparency in investment advisory service encounters


Nussbaumer, Philipp; Matter, Inu Sarah; à Port, Gian Reto; Schwabe, Gerhard (2012). Designing for cost transparency in investment advisory service encounters. Business & Information Systems Engineering, 4(6):347-361.

Abstract

Investment advisory services of financial service providers (FSPs) exhibit several characteristics that are detrimental to advisory quality. The interaction of advisor and client is strained by a lack of transparency regarding the advisory process (what activities are performed and why) and the information used therein (what information is used for what purpose and with what effect), as well as regarding the precise costs of the service and the recommended products. In prior research, we suggested that process and information transparency issues may be appropriately addressed with collaborative information technology (IT) artifacts. In this paper, we argue that collaborative, transparent artifacts may also be a premise of enabling cost transparency. To this end, we describe a complete research cycle of designing, implementing and evaluating a shared cost-transparent IT artifact to support client-advisor interaction in investment advisory encounters. Evaluation results suggest the efficacy of our design in improving the clients’ perceived cost transparency as well as increase their satisfaction and their willingness to pay for the received investment advice. These findings may also challenge the common belief of FSPs that transparent, fee-based advisory services would neither be accepted by clients nor be economically viable. Practical implications of these findings for designing advisory encounters with supportive IT are discussed.

Abstract

Investment advisory services of financial service providers (FSPs) exhibit several characteristics that are detrimental to advisory quality. The interaction of advisor and client is strained by a lack of transparency regarding the advisory process (what activities are performed and why) and the information used therein (what information is used for what purpose and with what effect), as well as regarding the precise costs of the service and the recommended products. In prior research, we suggested that process and information transparency issues may be appropriately addressed with collaborative information technology (IT) artifacts. In this paper, we argue that collaborative, transparent artifacts may also be a premise of enabling cost transparency. To this end, we describe a complete research cycle of designing, implementing and evaluating a shared cost-transparent IT artifact to support client-advisor interaction in investment advisory encounters. Evaluation results suggest the efficacy of our design in improving the clients’ perceived cost transparency as well as increase their satisfaction and their willingness to pay for the received investment advice. These findings may also challenge the common belief of FSPs that transparent, fee-based advisory services would neither be accepted by clients nor be economically viable. Practical implications of these findings for designing advisory encounters with supportive IT are discussed.

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6 citations in Scopus®
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Additional indexing

Item Type:Journal Article, refereed, original work
Communities & Collections:03 Faculty of Economics > Department of Informatics
Dewey Decimal Classification:000 Computer science, knowledge & systems
Language:English
Date:2012
Deposited On:05 Feb 2013 08:31
Last Modified:05 Apr 2016 16:29
Publisher:Springer Gabler
ISSN:1867-0202
Additional Information:The original publication is available at www.springerlink.com
Publisher DOI:https://doi.org/10.1007/s12599-012-0237-1
Other Identification Number:merlin-id:7442

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