1. What is Trail Commission?

Trail commission is an ongoing fee paid to financial advisors or brokers for as long as a client holds an investment. It's typically calculated as a percentage of assets under management (AUM).

2. How Does the Calculator Work?

The calculator uses the trail commission formula:

Where:

• AUM — Assets Under Management (in currency)
• Trail Rate — Percentage fee (as a number, not decimal)

Explanation: The formula calculates the ongoing commission by multiplying the investment amount by the trail rate percentage.

3. Importance of Trail Commission Calculation

Details: Understanding trail commissions helps both advisors and investors track ongoing fees, which can significantly impact investment returns over time.

4. Using the Calculator

Tips: Enter the total assets under management and the trail commission rate. Both values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What's a typical trail commission rate?
A: Rates vary but typically range from 0.25% to 1% annually of AUM, depending on the fund and share class.

Q2: How often is trail commission paid?
A: Usually paid quarterly or monthly, based on the average AUM during the period.

Q3: Do all mutual funds pay trail commissions?
A: No, some no-load funds don't pay trails, while others may have different commission structures.

Q4: Can trail commissions be negotiated?
A: In some cases, especially for larger investment amounts, trail rates may be negotiable.

Q5: Are trail commissions disclosed to investors?
A: Yes, they must be disclosed in fund prospectuses and advisor compensation agreements.