Unveiling the Mysteries of Soft Dollar- A Comprehensive Guide to Understanding Its Impact on Financial Markets

What is Soft Dollar?

Soft dollars are a term commonly used in the financial industry, particularly in the context of investment management. In simple terms, soft dollars refer to the payments made by investment managers to third-party service providers in exchange for services that directly benefit the clients of the investment manager. These payments are typically not used to compensate the investment manager for their own services but rather to cover expenses related to the investment process. Unlike hard dollars, which are used to pay for the investment manager’s own services, soft dollars are intended to enhance the value of the investment services provided to clients.