It can be lucrative being an independent financial adviser. Tens of millions of pounds is paid to advisers every year from the money they look after on behalf of clients.

These payments – paid by pension companies and fund managers in the form of trail commissions – are designed to compensate advisers for the ongoing advice they give their clients. So, if you have a £100,000 fund portfolio, £500 a year could be whizzing its way to your adviser to pay for this regular advice. If you’re happy with the advice, this is probably a fee worth paying.

But what if you’re not? Or maybe you’ve simply lost touch with your adviser? In any of these cases, you might feel that these trail commissions being sucked out of your fund are money down the drain. But they don’t have to be.

Growing numbers of private investors are reaping the financial benefits of trail commissions as many advisers begin charging fees. If you use a fee-based adviser, they will typically deduct any trail commissions they receive from their hourly rate. Or they may simply rebate all trail commissions back into your portfolio, thereby enhancing your returns.

Or there is a third way. Several discount brokers – in return for a nominal fee – will give you back your trail commissions in the form of a cheque each year.

There can be a lot of money at stake. The typical rate of trail commission is 0.5 per cent. It is typically calculated on a monthly basis for investment products such as unit trusts and other funds, but on a quarterly or semi-annual basis for pensions and insurance products. The trail commission is usually paid to the IFA every quarter for funds, and twice a year for pensions and insurance.

Trail commission is also paid on endowments or term life assurance, and is sometimes known as renewal commission. The typical commission structure for these products involves initial commission paid on the first few years of the product’s life, which can amount to up to 25 per cent of premiums paid, followed by renewal commission that is typically 2.5 per cent of monthly premiums.

Investment bonds can also be subject to trail commission ranging from 0.25 per cent to 0.75 per cent a year.

This means that if you have, say, unit trusts and Isas worth £150,000, investment bonds worth £50,000, and pay £250 a month into a life assurance policy, you may well be generating more than £1,000 a year in trail commissions for an IFA.

If you want to claim this money for yourself, some IFAs offer rebate services. Cavendish Online, for example, will rebate trail commission but keeps the first £10 of commission for each plan you hold with them. Intelligent Money returns all trail commissions in return for an annual fee of £35. Hargreaves Lansdown and Chartwell, both firms of financial advisers, offer a similar service (see box).

Cavendish Online and Intelligent Money fall into the discount broker category, which means they offer basic services at a low cost. But it is also possible to claim back trail commissions by going to a full-service financial adviser, particularly if you choose one who makes money by taking fees from clients rather than commissions from product providers such as fund managers and insurers.

For example, Bloomsbury Financial Planning, a fee-based IFA firm, accepts trail commissions but always deducts the full amount from the client’s quarterly bill. If your assets generate trail commission of £1,000 in the three months to the end of December and your full bill for that period would be £3,000, you will only need to hand over £2,000 to Bloomsbury.

Bloomsbury targets wealthy investors and its minimum annual fee is £10,000, so it is only a suitable option if you are looking to invest more than £1m.

Clayton and Company, a Northamptonshire-based IFA, offers clients the choice of using trail commission to pay for the cost of an annual portfolio review. Buckles Investment Services, the largest IFA group in Wales, offers a similar option.

The tax status of trail commission rebates is a grey area. But HM Revenue and Customs recently confirmed that, under normal circumstances, “no tax arises where an ‘ordinary retail customer’ receives a share of commission or cashback”. It sounds like another compelling reason to consider unlocking this hidden cash.