Client mix decision Spencer Grant, a financial planner, contacts and meets with local individuals to assist with


Client mix decision Spencer Grant, a financial planner, contacts and meets with local individuals to assist with financial planning and investments in Spencer's employer's investment services company. Spencer receives no fee for financial planning advice, but in addition to his salary, he receives commissions on client investments in the investment services company. Commission rates vary across different investment products. Spencer's employer pays office and phone costs and also reimburses Spencer for business-related travel. Satisfied clients have recommended Spencer to their friends, and Spencer now finds himself with more clients than he can handle in the 40 hours per week he would like to work. To analyze where to most profitably spend his time, Spencer has classified his current set of customers into the three groups listed here. The hours devoted per customer include direct contact time, travel time, and research and follow-up time for the clients. Spencer will introduce clients he is unable to serve to one of his colleagues.


Clients in group A are generally interested in hearing about new investment products that Spencer's company is offering and will usually invest sizable amounts in new products after meeting with Spencer or conversing with him on the phone. Clients in group B will also invest but generally in smaller amounts than clients in group A. Clients in group C appreciate meeting with Spencer because of the excellent advice he provides in planning for retirement and other future expenses but have little discretionary income to invest. Group C clients also generally invest in products with a lower commission rate for Spencer. However, Spencer maintains contact with these clients because he anticipates they will become more profitable as their careers develop.Required(a) Based on the data given, what client mix will maximize Spencer's monthly commissions, assuming he works 160 hours per month?(b) What other factors should Spencer consider as he makes his decisions about his client mix?

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For  book-img-for-question

Management Accounting Information for Decision-Making and Strategy Execution

ISBN: 978-0137024971

6th Edition

Authors: Anthony A. Atkinson, Robert S. Kaplan, Ella Mae Matsumura, S. Mark Young

Question Posted: