Trail commissions: Whose hands in your pocket?

Every year, financial advisers, brokers, agents and salespeople earn an average of $1,851.25 from each Australian through trailing commissions. These commissions are paid on everything from car insurance to superannuation, managed funds and home loans. On home and investment loans bought through brokers, trailing commissions generate an average rate of 0.25 per cent on outstanding balances. On super and managed funds, trails range from 0.10 to 1 per cent but are usually about 0.35 per cent. On life and TPD insurance, brokers earn between 5 and 10 per cent of a consumer's premium each year – or up to 30 per cent if the broker forgoes an upfront commission. Trauma and income protection insurance earn the broker 7.5 per cent per premium while on house insurance the trail is about 10 per cent. On car insurance it's between 7.5 per cent and 15 per cent.

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