trailing commission

Trailing Commission

A commission that the salesperson of a mutual fund receives each year an investor remains a shareholder. That is, the salesperson receives the first trailing commission when the investor first buys shares in the fund, and a new trailing fee each year thereafter. Critics of this practice point out that it can create a moral hazard that the salesperson will aggressively sell a fund because of his own financial incentive, rather than because he believes it to be a good investment for the potential shareholder. Not all mutual funds pay their sales staff trailing commissions. A trailing commission is also calling a trailer fee. See also: Load.

trailing commission

A commission paid annually to a sales agent for as long as a client's money remains in an account. Also called trailer fee.
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According to the SEC, Stanford paid a 1 percent commission upon the sale of a CD "and as much as an additional 1% trailing commission during the term of the CDs." At a minimum, then, Alguire sold at least $13 million worth of the CDs during the two-year period covered by the lawsuit, and probably much more.
However, with the recent ban on entry load for mutual funds, advisors are only earning trailing commission (from the second year onwards) and passing on the same to their clients in a combination model.
A distributor could make money through the trailing commission that the manufacturer gave him.
Presenting the bank's case before the banking royal commission, Daniel Huggins, the bank's executive general manager of home buying, told the commission, 'The longer the loan takes to pay off and the larger it is, then the larger the trailing commission and that can lead to a conflict - that is a conflict - between the customer and the broker.'
The commission structure still comprises a trailing commission of 0.15 per cent in years one to three and a trailing commission of 0.20 per cent in year four.
The management fees of other series will include the standard trailing commission paid to the dealer.
Advisors don't get a trailing commission when their clients live past age 100.
Commissions, trailing commissions, management fees and expenses may all be associated with mutual fund investments.
In its recommendations, the Royal Commission had urged authorities to abolish trailing commissions paid to mortgage brokers during the term of a property loan.
Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments.
My understanding is that we'll be able to continue to receive trailing commissions for advice provided prior to the rule's effective date in April 2017.
But scratch below the seemingly successful surface and you may find a practice with poor persistency (and weak trailing commissions), limited cross sales, and a lousy reputation in the community.