Manage (And Protect!) Your Investments: What You Need To Know About Trailing Commissions

It’s no secret that, when it comes to successfully managing and protecting our financial investments, knowledge equals empowerment. While most of us maintain a steady focus on the upswing (or downturns) happening in our portfolio at any given time, we often fail to have a working knowledge on some of the reoccurring, long term fees and obligations we incur throughout the lifespan our of investments. Case in point: trailing commissions.

Not quite sure what trailing commissions involve? You’re certainly not alone. Here at iRefund, many of our financial experts find that even the savviest investor can sometimes feel a bit blurry on some of the small print details attached to their funds. Fortunately, the team at iRefund can help you to understand what a trailing commission is, how it may affect your monetary reserves, and (most importantly) how you can effectively manage and protect what is rightfully yours.

Get The Basics: What Is A Trailing Commission And Where Is It Incurred?

 By definition, trailing commissions are simply reoccurring charges incurred on investments funds. The overall fees are based on a varied percentage of your overall investment value and are allocated to the advisor who coordinated your fund on an ongoing basis. As a general rule of thumb, most fee percentages range from 0.4% - 1.2%. While that doesn’t seem like a huge spread, consider this: over the lifetime of a $100,000 investment, you could be spending $1,000 annually in commission charges. When added up over time, these fees can really make a significant financial impact.

Trailing fees are also included on superannuation and allocated pension accounts as well as:

Personal Insurance Policies: A trailing commission is tacked onto virtually all personal insurance policies. Whenever you pay life, trauma, and/or income protection premiums, it’s a safe bet that you’re paying a trailing commission (generally 10-30%!) to the source that generated coverage for you.

Home Loans: Yes, a trailing home loan commission is attached to loans that required mortgage broker assistance. However, it’s important to note that the overall setup on a home loan commission varies from other trailing fees as the bank has to reimburse the mortgage broker from its own reserves and not from the homeowner’s monthly mortgage payments.

Trailing Commissions: You Do Have Options

Think you’re in the clear because you cut out the middle man advisor and went direct to your super fund or provider? Guess again. Trailing commissions in these scenarios are not refunded to portfolio owners (aka the customer!), but rather kept by the investment managers on the account. It’s all part of the built in infrastructure that mandates trailing commissions can’t be avoided. In short, often it’s not a matter of if a fee is incurred, but rather, where the fee payment will go.

Fortunately, there is hope when it comes to successfully navigating through the trailing commission process. iRefund’s team of professional and reputable financial analysts can help you maintain a steady focus on what you’re currently spending due to these long term charges. Rather than continuing to pay thousands of dollars per annum in trailing commissions, iRefund can help you determine which ones you have a claim to and work with you to get the refund you are entitled to.