Trailer Fee
Categories: Tax
Seeing the same commercial over and over for a movie we don’t want to watch really grinds our gears. “We should get paid every time we have to sit through this dumb movie trailer,” we complain to our friend through a mouth full of pizza. “We should get a fee...a trailer fee.” After asking us to please not talk with our mouth full, our friend informs us that “trailer fees” are already a thing, and they have nothing to do with movie trailers.
A “trailer fee” is a commission that a broker receives for recommending certain investment funds to his or her clients. The fee is paid by the firm that manages the fund, which gives some critics conflict-of-interest-related indigestion. After all, how can a broker say they’re acting in the best interests of their client when they’re collecting a commission for getting them to buy certain products? But trailer fee fans say there’s no conflict of interest to see here. Fund prospectuses have to disclose any trailer fees they pay out, so it’s not like there’s some secret, hush-hush, backroom bribery going on. Besides, the fees aren’t huge—1% of the value of the investment is pretty much the max—which isn’t that big of a deal, right? Eh...1% of a $100,000 investment is still a thousand bucks...but regardless, we want to check the fine print on our own mutual fund investments. After we eat some more pizza.
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Finance: What is commission?112 Views
finance a la shmoop. what is commission? well it's the greatest motivator for
salespeople in the world. it's the money some people make above and beyond their [ commission explained on a large screen]
salary. a little monetary carrot dangling out in front of a salesperson to you
know encourage them to sell sell sell. alright you're an agent who just sold a
house good for you. you get a 3% Commission. the house went for a million
bucks well you get 30 grand for the privilege or at least your brokerage
does, and then you get some piece of that. ok now you're the stock broker who sold
3 million shares of stock. well good for you
you get four cents a share in Commission 120 grand in the pocket of your
brokerage and you get some piece of that Commission. you're the Hollywood agent[equation]
who just inked Brad pitiful into a movie deal worth 20 million bucks, well good
for you your agency gets a 10% commission or two
million dollars. yeah that's for a Dewey Cheatham and Howe agency best one in
Hollywood. yeah they rep Harvey Weinstein. now for someone who's attempting to sell
a polished version of that Harvey Weinstein story well that's a commission
impossible. [man frowns]