Retainer

Definition

A fee paid up front for an advisor's time, whether or not a deal closes.

Why It Matters

It buys attention rather than an outcome, and that cuts both ways. A firm charging one has a reason to work the file from the first week instead of waiting to see whether a buyer turns up, while a firm charging nothing earns only on a closing, so its incentive is volume. The question to ask is whether the retainer credits against the success fee at the end. A credited retainer is a timing question; an uncredited one is a real cost that never comes back, whatever happens to the deal.

In numbers: A $5,000 monthly retainer credited against a $150,000 success fee costs the seller nothing extra when the deal closes in month six.