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What Is GDC for Financial Advisors?


A gross dealer concession (GDC) gets paid to a brokerage firm when a financial product is sold by a salesperson or financial advisor on commission. These products include securities like stocks, bonds or mutual funds, as well as insurance products like annuities or long-term care. A percentage of that GDC will also get paid to the financial advisor. Knowing how financial advisors can earn a percentage of GDC can help you understand what you’re paying for professional services.

SmartAsset can match you with a fiduciary financial advisor who puts your client interests first.

What Are Gross Dealer Concessions?

GDC refers to the total revenue generated by financial advisors, which gets paid to a brokerage firm, before any costs are subtracted. These revenues primarily come from commissions on sales, fees for managing assets or consulting services, which can contribute significantly to the pricing of financial advisor services and their overall business model.

For instance, services that contribute to GDC may include portfolio management, financial planning, investment advice, insurance brokerage and the sales of financial products such as mutual funds and annuities. Each of these services carries different fees and commissions, all of which are part of the GDC.

Breaking Down Financial Advisor Costs and GDC

A woman evaluating the cost of hiring a financial advisor

Expenses related to financial advisory services can include hourly consultation fees, fixed fees for specific services, asset management fees and commissions on sales of financial products. 

These costs can vary widely depending on the advisor and the complexity of the services provided. And the percentage of GDC that an advisor can earn will depend on their business model and the types of services offered.

For example, if you invest $10,000 in mutual funds with a 6% sales charge, then the GDC on that sale will be the total of the charge ($600), which will leave you with an account balance of $9,400. And if the financial advisor get 35% of that GDC, then they will earn $210 out of that $600 sales charge.

You should also note that advisors specializing in high-net-worth client services could have a higher GDC than those catering to the average investor because of the larger asset base and the potential for higher fees and commissions.

Fee-Only vs. Fee-Based Commissions

A fee structure determines both how financial advisors are paid and how clients will get charged. There are two types of fee structures: Fee-only and fee-based

Fee-only advisors earn their income solely from the fees they charge for their services, while fee-based advisors can earn income from both fees for services and commissions on the sales of financial products.

Fee-only advisors can offer more impartial advice as they don’t earn commissions on sales, but their fees can be higher. Conversely, fee-based advisors can provide a wider range of products, but conflicts of interest could arise as they might be incentivized to recommend products that earn them higher commissions. 

You note that fiduciary advisors will be held accountable to a fiduciary duty, independently of their fee structure. This means that they must serve client interests first by recommending the best financial products, irrespective of whether they earn a commission on those products.

Bottom Line

A couple holds a Zoom call with their financial advisor

GDC plays a crucial role in how financial advisors can earn income, therefore impacting pricing and business models. Understanding how financial advisors get paid can help clients estimate costs associated with hiring them.

Tips to Hire a Financial Advisor

  • Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
  • Once you find a financial advisor, ask the right questions to make sure they’re a good fit for your financial needs and goals.

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