# Trailer fee (trailing commission)

> A trailer fee is a commission a mutual fund company pays the advisor's firm every year you hold the fund, built into the fund's MER rather than billed to you.

Canonical page: https://find.wellspent.co/glossary/trailer-fee/
Also called: trailing commission, trailer, embedded commission

Trailing commissions typically run from 0.25% to 1.5% of your investment's value a year and come out of the fund's management fee, so you pay them through lower returns. At 1% on a C$500,000 portfolio, that's C$5,000 a year, above the middle half of what Canadian fee-only planners charge for a year of ongoing planning (C$1,200 to C$4,000).

Since June 1, 2022, fund companies can't pay trailers to order-execution-only dealers, the discount brokerages that don't assess whether an investment suits you.

Trailers are commissions, so an advisor paid through them isn't fee-only. Many fund companies offer a separate series of the same fund without a trailer, for accounts where the advisor charges you directly.

## How to check

The Fund Facts for each fund you own lists its trailing commission. Your dealer's annual report on charges and other compensation shows the total trailing commissions paid on your accounts in dollars.

## Sources

- [Ontario Securities Commission, GetSmarterAboutMoney.ca: Mutual fund fees (updated September 26, 2023)](https://www.getsmarteraboutmoney.ca/learning-path/mutual-funds-segregated-funds/mutual-fund-fees/)
- [Ontario Securities Commission, Canadian securities regulators adopt ban on trailing commissions for order-execution-only dealers](https://www.osc.ca/en/news-events/news/canadian-securities-regulators-adopt-ban-trailing-commissions-order-execution-only-dealers)
- [Wellspent, What fee-only financial advisors charge (2026), Canadian figures](https://find.wellspent.co/reports/fee-only-advisor-fees/)

## Related terms

- [Management expense ratio (MER)](https://find.wellspent.co/glossary/mer.md)
- [Deferred sales charge (DSC)](https://find.wellspent.co/glossary/deferred-sales-charge.md)
- [Fee-only financial advisor](https://find.wellspent.co/glossary/fee-only.md)
- [Dealing representative](https://find.wellspent.co/glossary/dealing-representative.md)