often refers to a situation where an investor need not take money from his or her own funds (which would be hard dollars), or where the cost is tax deductible, thus costing less than the face amount.
means of paying brokerage firms for their services through commission revenue, rather than through direct payments, known as hard-dollar fees. For example, a mutual fund may offer to pay for the research of a brokerage firm by executing trades generated by that research through that brokerage firm. The broker might agree to this arrangement if the fund manager promises to spend at least $100,000 in commissions with the broker that year. Otherwise, the fund would have to pay a hard-dollar fee of $50,000 for the research. Following the mutual fund scandals of the early 2000s, the Investment Company Institute came out in favor of limiting soft dollars to proprietary research, and a number of large funds followed by curtailing soft money arrangements or eliminating them entirely.Compare with hard dollars.
