Loading the player...

What is a 'Brokerage Fee'

A brokerage fee is a fee charged by an agent or agent’s company to conduct transactions between buyers and sellers. The broker charges the brokerage fee for services such as purchases, sales, and advice on the transaction, negotiations or delivery. There are many types of brokerage fees charged in various industries such as stocks, insurance, realty or delivery services.

BREAKING DOWN 'Brokerage Fee'

Brokerage fees are based on a percentage of the transaction, a flat fee or a combination of the two fees. It is also known as a broker fee. The industry and the type of broker selected determine the brokerage fee a customer pays.

In the real estate industry, a brokerage fee is a flat fee charged to the buyer, the seller or both. A mortgage broker helps potential borrowers find and get approval for mortgage loans.

In the insurance industry, a brokerage fee is a cost a broker charges for services. The broker finds the best insurance policies to meet a customer’s needs. In some cases, brokers may collect fees from both the sellers and buyers of insurance.

In the stock industry, a brokerage fee is a cost an investor pays when buying and selling trades or to keep an account. The main three types of brokers that charge brokerage fees are full-service, discount and online.

Full Service

Full-service brokers offer a range of services such as estate planning, tax advice and personal advice either in-person or over the phone. They offer a large choice of products. However, they are the most expensive type of broker.

The standard commission fee is 1 to 2% of a client’s assets. For example, Tim wants to purchase 100 shares of Company A at $40 per share. If the broker charges a 2% brokerage fee to process the trade, the cost of trade would be $4,080, $40 x 100 shares = $4,000. $4,000 x .02 = $80. $4,000 + $80 = $4,080.

A 12b-1 fee is a recurring fee that the broker receives for selling a mutual fund. The fees range from 0.25 to 0.75% of the total value of the trade. Annual maintenance fees range from 0.25 to 1.5% of the assets.


Discount brokers charge lower fees than full-service brokers do. They charge a flat fee for each trade transaction, but they do not offer personal advice and offer a narrower choice of products. The per-trade flat fee ranges from $5 to $30 per trade. Account maintenance fees are usually 0.5%.


Online brokers are the least expensive type of broker. They allow investors to buy and sell trades online. They offer limited access to customer service. The per-trade flat fee ranges from $5 to $19.95 per trade. Account maintenance fees range from $20 to $50.

How to Reduce Fees

Investors can reduce account maintenance fees by comparing brokers, fees and the services provided. Per-trade fees can be avoided by buying no-load mutual funds or fee-free investments. Read the fine print or fee schedule, and ask questions about the fees charged.

  1. Exchange Fees

    A type of investment fee that some mutual funds charge to shareholders ...
  2. Clearing Fee

    A fee charged by a clearing house for its services. A clearing ...
  3. Service Charge

    A type of fee charged to cover services related to the primary ...
  4. Brokerage Company

    A business whose main responsibility is to be an intermediary ...
  5. SEC Fee

    A nominal fee that was created by the Securities Exchange Act ...
  6. Fee Income

    Revenue taken in by financial institutions from account-related ...
Related Articles
  1. Financial Advisor

    Understanding Brokerage Fees

    Agents charge brokerage fees for facilitating transactions between buyers and sellers.
  2. Retirement

    Are Fees Depleting Your Retirement Savings?  

    Each retirement account will have a fee associated with it. The key is to lower these fees as much as possible to maximize your return.
  3. Investing

    A Guide To Investor Fees

    Fees are one of the most important determinants of investment performance and something that every investor should know.
  4. Investing

    Picking Your First Broker

    If you're a rookie investor, your first big investment decision should be an informed one.
  5. Managing Wealth

    How To Optimize Your Portfolio and Reduce Fees

    Investment fees aren't avoidable altogether, but there are strategies investors can employ to keep those fees at bay and reduce the impact on returns.
  6. Financial Advisor

    Are Financial Advisor Fees Too High?

    Fees charged by financial advisors run the gamut. Are you getting a fair deal or paying too much?
  7. Financial Advisor

    Are Fees Eating Up Your Nest Egg?

    You may not be able to avoid all fees associated with retirement planning, but you should know what you’re being charged for. Here's a list of common fees.
  8. Retirement

    How a 1% Annual Fee Can Ruin Your Nest Egg

    What kind of impact does an annual 1% fee have on your portfolio? The answer may surprise you.
  9. Personal Finance

    Watch Out For "Junk" Mortgage Fees

    So many fees are tacked on to a mortgage, that it's easy to pay more than you have to.
  10. Investing

    3 Investment Fees That Are Negotiable

    Investment fees are a necessary evil but that doesn't mean they have to be overly costly. There are ways to negotiate some of the expenses down.
  1. What kinds of fees are involved in futures trading?

    Learn what the various costs are that are charged by brokerage firms and trading exchanges to individual futures trading ... Read Answer >>
  2. How can I prevent commissions and fees from eating up my trading profits?

    First off, understand that there is no universal system regarding trading commissions charged by brokerage firms. Some charge ... Read Answer >>
  3. Where do I look for fees that I am charged on investments? What are those fees called?

    The fees and expenses charged for investments vary. The fees usually depend on the type of investment and the investment ... Read Answer >>
  4. What are typical trust fund management fees?

    Learn about trust fund management fees, such as the annual management fee, annual expense ratio, brokerage commissions and ... Read Answer >>
Hot Definitions
  1. IRS Publication 970

    A document published by the Internal Revenue Service (IRS) that provides information on tax benefits available to students ...
  2. Federal Direct Loan Program

    A program that provides low-interest loans to postsecondary students and their parents. The William D. Ford Federal Direct ...
  3. Cash Flow

    The net amount of cash and cash-equivalents moving into and out of a business. Positive cash flow indicates that a company's ...
  4. PLUS Loan

    A low-cost student loan offered to parents of students currently enrolled in post-secondary education. With a PLUS Loan, ...
  5. Graduate Record Examination - GRE

    A standardized exam used to measure one's aptitude for abstract thinking in the areas of analytical writing, mathematics ...
  6. Graduate Management Admission Test - GMAT

    A standardized test intended to measure a test taker's aptitude in mathematics and the English language. The GMAT is most ...
Trading Center