Trail commission

From Wikipedia, the free encyclopedia

Trail commission is a charge made by investment management companies on the basis of the amount invested with them.

It is generally legal, but its justification is disputed, and some people have even proposed a ban. It is said by its supporters to encourage the adviser to maintain the value of the portfolio, thus aligning their interests with those of their clients. Detractors suggest that investors are usually unaware of it, and that it is ineffective as an incentive.

In Britain, the FSA has considered restricting it, but rejected such measures.