DEFINITION of ‘Half-Commission Man’
A half-commission man is an individual who introduces clients to stockbrokers or other market professionals. The half-commission man is a matchmaker who receives an agreed-upon percentage of any commissions that arise as a result of the new client. Although a stockbroker must share some of his or her commissions, the theory is that the broker will come out ahead due to an increase in the number or quality of clients.
BREAKING DOWN ‘Half-Commission Man’
A half-commission man can either work for a specific stockbroker or be a freelancer. Half-commission men earn money by establishing relationships between stockbrokers and clients. Any commissions that the stockbroker earns from the client will be shared at a specified rate (usually half) with the half-commission man.
How the Half-Commission Man Relationship Works
Let’s say a half-commission man knows a wealthy client who has a net worth of $40 million. At a cocktail party, she mentions that she is looking for a new broker. The half-commission man knows many advisers and tells her he would be happy to look into some for her and introduce her to his top picks.
The half-commission man does the work, meeting with each broker. During those meetings, he cuts a deal whereby he would get a cut of the commission a broker would earn from the wealthy client if she signs with the broker. Accordingly, the wealthy client picks broker X and generates $15,000 in commissions for the broker, earning the half-commission man $7,500.
Half-Commission Man and Executive Search
The half-commission man is similar to the executive-search model. Executive search (informally called headhunting) is a recruitment service that organizations hire to seek out and recruit qualified candidates for senior-level and executive jobs. Executive recruiters may also seek out and recruit other highly specialized and/or skilled positions in organizations for which there is strong competition in the job market, such as senior data analysts or computer programmers.
The method usually involves commissioning a third-party organization, typically an executive-search firm, but possibly a standalone consultant or consulting firm, to research the availability of suitable qualified candidates working for competitors or related businesses or organizations. Having identified a shortlist of qualified candidates who match the client’s requirements, the executive search firm may act as an intermediary to contact the individual and see if they might be interested in moving to a new employer. The executive-search firm may also carry out initial screening of the candidate, negotiations on remuneration and benefits, and preparing the employment contract.