Industry stakeholders are split almost down the middle on the issue. The Canadian Securities Administrators are taking a serious look into the matter and considering the possibility of banning embedded commissions or trailer fees – a move Britain and Australia have already taken. The big questions right now are whether embedded commissions should be banned altogether, have more rules and regulations attached to them or just left as they are. Segregated funds offered through Insurance companies carry similar fees.Įmbedded commissions are a very hot topic in the insurance industry right now. These services can include, answering questions about the performance of your investments and other related matters. The trailer fee compensates the advisor for ongoing service. Commissions generally range from 0.25% to 1% and are paid out of the management fund’s expenses. This commission is paid as long as you hold units in the fund. Morning Star defines embedded sales commissions (also known as trailer fees) “as service commissions paid by the mutual fund company to the sales representative managing your mutual funds.
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