November 5, 2010
File Number S7-15-10
I have been a licensed insurance professional and registered representative since 1999.
I support the new SEC rule 12b-2, which would continue the 25 basis points fee that is used to ensure investors receive ongoing service and advice, and the SECs proposed use of the terms marketing and service fees and ongoing sales charge in place of 12b-1 fees to improve transparency in disclosure documents.
This allows me to continue to service my clients that expect service from the advisor they hired to assist them in reaching there investment goals.
However, I strongly object to the SEC permitting mutual fund companies to issue a new class of shares at net asset value that would allow broker-dealers to set their own sales charge and commission amount.
Competition based on price and cost sounds good but will come at the expense of needed advice and service for middle market investors and there are many of them
As many broker-dealers lower their sales charges and fees in an effort to gain market share, it will no longer be financially feasible for registered representatives to continue to provide the proper level of individualized advice and ongoing service that we currently provide to our middle and lower market clients and as you know there are many more investors in these social classes that need our help.
As a result, only upper-income investors who can afford assets-under-management arrangements or higher cost/higher service classes of shares will continue to receive personalized investment advice.
Investors with smaller fund account balances will be forced to self-direct their accounts if they wish to continue to own mutual funds because their advisors will no longer be able to afford to spend the time to guide and advise them, leaving discount brokerage fund platforms as the only affordable option for middle and lower market investors.
The people the SEC is trying to protect the most--middle and lower market investors—will be hurt the most, since they will be deprived of the guidance and service they need and deserve.