From: Ted Stephens |
These fees, as they are used now, should be renamed as service fees. I have a very large number of accounts under management. Almost all of these investments went in as "A shares" at large dollar amount break points (low or no load percentage due to the large total amount invested). I do service each and every one of these accounts on an ongoing basis; I know my service is very valuable to my clients. The 12b-1 fees from these accounts cover my office expenses. I do not charge any other investment fees to my clients. It is my belief that this is the most cost efficient form for my clients to hold their assets and have my service available. If these fees went away I would charge the client directly. Due to the additional administration of the billing involved, the fees would have to substantially increase. These fees are an excellent example of economies of scale and market efficiency. I also imagine if these fees went away many brokers would have more incentive to turn over accounts, rather than service the accounts with the fee stream available. -- |