How do incentives or rebates for financial advisors work, and how do they benefit me?
Rebates (upfront payments) and trailer fees (ongoing percentage of AUM) are common compensation mechanisms in fund distribution. They remunerate advisors for marketing the product, conducting due diligence and providing ongoing client service. From a manager’s perspective, offering competitive but transparent incentives helps motivate advisors to allocate client capital and maintain those positions over time. It […]
How do rebates and trailer fees work, and how can they impact AUM growth?
In the distribution of investment products, advisers and distributors often receive compensation via rebates (upfront or ongoing) and trailer fees (continuing payments based on assets under management). These payments are typically calculated as a few basis points on the notional invested and are designed to compensate the advisor for marketing, client servicing and due diligence. […]