June 13, 2007
It is my understanding that the SEC is considering a revision to Rule 12b-1. I wish to encourage the commission to consider revising the definition and purpose of the fee and recognize that it is a useful tool that allows small investors to recieve continuing service from financial advisors such as me.
12b-1 fees represent only about 13% of my revenue, but for some of my clients, they are the only revenue I receive. This is specifically true of clients that I move from competing firms. If clients are already invested in funds that pay 12b-1 fees, I will advise the client to keep these funds and I am willing to accept the 12b-1 fees as my only income. However, if these fees are discontinued, I will have no choice but to charge the client an asset-based fee that will likely be much higher than the 12b-1 fees they are currently paying (My firm's asset-based mutual fund "wrap" program has a 1.0% minimum fee).
Thank you for your consideration.