Each Way

Each way describes a situation in which a broker earns a fee from both the buyer and the seller in a transaction.

Each way represents an opportunity for a broker to double dip, effectively getting paid twice for a single transaction. The mechanics of going each way on a deal are straightforward: A given broker may represent both buyers and sellers. If one client wants to sell a security that another client would like to buy, the broker may facilitate a transaction between the two clients and charge fees to both of them.

The allure of getting paid each way, sets up a potential conflict of interests for brokers. The broker, who should be acting in the best interests of the client, has a financial incentive to match up one client with another, and collect two commissions from a single transaction, rather than help the client find a seller or buyer who may be a better match but generate less in fees for the broker.

For that reason, some brokerages place limits on their brokers’ ability to go each way.

Brokers have opportunities to double dip besides going each way on a trade between two retail investors. For example, managers of fee-based accounts can buy shares of mutual funds from their own firm, earning an internal commission in addition to the management and transaction fees the investor pays. The broker could facilitate this transaction ethically by depositing the internal commission into the client’s account, but it would be easy not to and hope no one notices.

Investors should read all documents coming from their brokers because they will include any mandatory disclosures regarding fees. If those documents are rife with legalese, investors should enlist the aid of a lawyer.

Real estate transactions are an opportunity, outside of financial markets, for brokers to go each way. It’s generally legal if both parties are aware that the agent represents both of them and makes two fees, but the broker can’t pass confidential information from one party to the other, such as the seller’s real bottom line.

In 2016, the CBC reported on real estate agents in Toronto who unethically and unlawfully used their status as the seller’s agent to privilege offers from prospective buyers they also represented. In doing so, the agents violated their fiduciary responsibilities to the sellers. The media treated this partly as a Canadian phenomenon, pointing to the country's recent real estate boom and influx of realtors to paint the situation largely as the product of desperate brokers taking advantage of slow-to-react regulatory agencies. But dual agency is legal in other countries, such as the United States. As such, sellers should be cautious when choosing realtors to ensure that their representatives will work for their best interests.