July 28, 2010
Thank you for taking these comments: My concern pertains to the smaller client one who has less than $250,000. If you limit the 12b-1's to .25% these clients are not going to receive the attention/service that they deserve from the advisors. I have many clients of this size who i meet with on a quarterly, semi-annual, or annual basis, plus unlimited amount of phone calls. If my compensation is going to be limited to .25% per year as opposed to a "c" share fee than from a business standpoint it does not make sense for me to service this client. Once you also add in the legal responsibility the advisor is in a lose, lose situation.
You have to compensate the reps for the financial reviews, cash flow and retirement analysis, portfolio re-allocations, etc. On a $100,000 account with a .25% 12b-1 fee that is $250 per year: before a broker dealer takes their percentage plus trading fees charged by Clearing firms. Advisors will not be able to give the proper service to this client therefore once again these clients will be left to make their own decisions and most likely will never be in a position to retire to the lifestlye thay are accusotmed to.
I have many clients in managed account and charge them 1% per year but in reality how is this any different than a 1% 12b-1 fee in a C share? I agree with all the transperancy changes but frankliy i have always lived by that rule so I have a hard time imagining advisors who do not.
Competitive sales charge on Mutual Funds?
right now if we all follow same pricing schedule then it simply comes down to the quality of service provided to clients. We all know every consumer is price conscience and now you are going to get "less scrupulous" advisors simply lowering their fees to attract business--who is going to lose over the long term? the CLIENT.