Commission-only compensation

Commission-only compensation

Payment to a financial advisers of only commissions on investments purchased when the client implements the recommended financial plan.

Commission-Only Compensation

A form of payment to a brokerage in which the brokerage receives a percentage of the value of each transaction that a client orders. Commissions are seen as advantageous to a client because he/she does not have to pay a broker if he/she does not make orders. However, commissions create an incentive for brokers to make as many transactions as possible; this has resulted in the regulation of commissions by the SEC. The percentage of a commission varies by brokerage, with those charging higher commissions offering a wider variety of investment advisory services. Low-commission brokerages usually offer no investment advice and simply fill orders.
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The historical commission-only compensation for mortgage brokers apparently will remain the norm.

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