It refers to the transaction charge paid to a broker for a securities trade. The fee can be a fixed one or a percentage of the trade amount.
An investor should consider the commission charged for various services provided by a broker or a fund manager.
Brokers portray themselves as fee-based rather than commission-based, as fee-based involves charging a flat rate whether the sale has been made or not. However, in commission-based, it implies that the broker wants to make the sale for his personal interest compromising the client’s interests and needs.
For many brokers and financial advisors, a major chunk of their income comes from charging commissions from clients, investors as well as fund houses.