what is a brokerage fee 
a brokerage fee is a fee or commission a broker charges to execute transactions or provide specialized services on behalf of clients brokers charge brokerage fees for services such as purchases sales consultations negotiations and delivery there are many instances of brokerage fees charged in various industries such as financial services insurance real estate and delivery services among others understanding brokerage feesbrokerage fees also known as broker fees are based on a percentage of the transaction as a flat fee or as a hybrid of the two brokerage fees vary according to the industry and type of broker in the real estate industry a brokerage fee is typically a flat fee or a standard percentage charged to the buyer the seller or both mortgage brokers help potential borrowers find and secure mortgage loans their associated fees are between 1 and 2 of the loan amount in the insurance industry a broker unlike an agent represents the interests of the customer and not the insurer brokers find the best insurance policies to meet customers needs and will charge fees for their services in rare instances brokers may collect fees from both the insurer and the individual buying the insurance policy in the financial securities industry a brokerage fee is charged to facilitate trading or to administer investment or other accounts the three main types of brokers that charge brokerage fees are full service discount and online stock brokerage fee breakdownfull service brokers offer a wide range of products and services such as estate planning tax consultation and preparation and other financial services as a result they earn the largest brokerage fees not so long ago it was not uncommon for a full service broker to charge upward of 100 per trade for orders placed with a human broker the standard commission for full service brokers today is between 1 to 2 of a client s managed assets for example tim wants to purchase 100 shares of company a at 40 per share tim s broker earns a commission of 80 for facilitating the transaction 40 share x 100 shares 4 000 4 000 x 02 commission 80 when the commission is added the total cost of the trade is 4 000 80 4 080 a 12b 1 fee is a recurring fee that a broker receives for selling a mutual fund the fees range from 0 25 to 1 00 of the total value of the trade annual maintenance fees range from 0 25 to 1 5 of the assets because discount brokers offer a narrower selection of products and provide no investment advice they charge lower fees than full service brokers do discount brokers charge a flat fee for each trade transaction the per trade flat fee ranges from less than 5 to more than 30 per trade account maintenance fees are usually around 0 5 per year based on assets held online brokers have the least expensive brokerage fees their primary role is to allow investors to conduct online trading customer service is limited many online brokers have removed a specific commission fee for trades on stock shares but commission fees for options or futures trades still apply the fees vary and may be based on a per contract or per share charge account maintenance fees vary between 0 to 50 per account per year reduction of brokerage fees to zeroinvestors can reduce account maintenance fees by comparing brokers their provided services and their fees buying no load mutual funds or fee free investments can help avoid per trade fees it is important to read the fine print or fee schedule and ask questions about any fees charged today many online platforms like robinhood offer 0 trading in many stocks and etfs as well as many others that have since joined the commission free movement the disappearance of outright brokerage fees for trades has been the result of intense competition resulting in fee compression these services instead make money by selling your order flow or loaning your stock positions to short sellers 1fees for money management have also been compressed through online services called roboadvisors which use algorithms to automatically establish and maintain an optimal investment portfolio these services charge far less than a human advisor generally between 0 25 and 0 50 per year based on assets held with some even lower 