It is legal, but its justification is disputed, and some people have even proposed a ban. Its supporters claim it encourages the adviser to maintain the value of the portfolio, thus aligning their interests with those of their clients. Detractors suggest that investors are usually unaware of it, and that it is ineffective as an incentive.

In Britain, the FSA has considered restricting it, but rejected such measures.

External links

General Information

Articles and Opinions

• Article in The Observer (Britain) warning investors.
• Article in www.theage.com.au (Australia) calling for an end to trail commissions.