# Revenue sharing

> Revenue sharing is when a fund company, platform or other third party passes part of what it earns on an investment to the firm that recommends or sells it.

Canonical page: https://find.wellspent.co/glossary/revenue-sharing/

The money comes out of what the fund manager or sponsor earns, so you don't see it as a separate charge. What it creates is a reason for the firm to favor the investments that pay it over ones that don't.

The SEC treats it as a core conflict. Form CRS, the short relationship summary every adviser and broker must give retail clients, has to address revenue sharing alongside proprietary products, third-party payments and principal trading. Form ADV Part 2A, Item 14, requires an adviser to describe any economic benefit it gets from someone other than a client for advising clients, and how it handles the conflict.

A firm that receives revenue sharing on what it recommends isn't paid only by its clients, so it isn't fee-only.

## How to check

Read the conflicts section of the firm's Form CRS and Item 14 (Client Referrals and Other Compensation) of its Form ADV Part 2A. Then ask directly: "Does your firm receive any payments from the companies whose investments you recommend?"

## Sources

- [SEC, Form CRS instructions, Item 3.B (conflicts of interest)](https://www.sec.gov/files/formcrs.pdf)
- [SEC, Form ADV Part 2 instructions, Item 14 (SEC 1707, 08-22)](https://www.sec.gov/about/forms/formadv-part2.pdf)

## Related terms

- [Conflict of interest](https://find.wellspent.co/glossary/conflict-of-interest.md)
- [12b-1 fee](https://find.wellspent.co/glossary/12b-1-fee.md)
- [Soft dollars](https://find.wellspent.co/glossary/soft-dollars.md)
- [Fee-only financial advisor](https://find.wellspent.co/glossary/fee-only.md)