Payment to a financial advisers of only commissions on investments purchased when the client implements the recommended financial plan.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.
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.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved