What is gross dealer concession?
Gross dealer concession (GDC) is the revenue paid to a brokerage firm when commissioned securities and insurance salespeople sell a product. The commission the agent receives is usually a percentage of this figure, though some firms use Production Credits, usually smaller than GDC, to determine payouts and retain more revenue.
Key takeaways
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Gross dealer concession (GDC) is revenue paid to brokerage firms when salespeople sell commissioned securities and insurance, with agent commissions typically a percentage of GDC.
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GDC is relevant for insurance and securities salespeople whose commissions are based on it, and for investors purchasing stocks, bonds, or life insurance products.
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GDC provides transparency as it's published in prospectuses, allowing salespeople to compare compensation between firms and see how much the firm earns from their work.
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Brokerage firms use GDC as a consistent production measurement across all products and often adjust the percentage paid to salespeople to reward total production.
Where have you heard about gross dealer concession?
You'll be familiar with this term if you're an insurance or securities salesperson, as your commission is often based on GDC. You may also have heard of it if you're investing in stocks, bonds or life insurance products, for example.
What you need to know about gross dealer concession.
GDC provides transparency from both the salesperson's and the client's perspective, as the concession is usually published in the prospectus. It's relatively straightforward for the salesperson to compare potential compensation between brokerage firms, and allows him or her to see how much the firm is earning from their work.
For the brokerage firm, GDC offers a consistent measure of production across all products by totalling the GDC for the products sold. Firms often adjust the percentage of GDC paid to the salesperson as a way of rewarding total production.