September 8, 2010
I would like to comment on the proposed 12(b)-1 reform proposal (S7 09-04) that is currently being reviewed.
If this proposal goes through I am concerned that a lot of small investors will no longer be able to receive investment advice and their accounts would be too small to carry by investment professionals. Without the compensation through 12(b)1 fees, investors of small accounts would not make it worthwhile to service them on an ongoing basis.
While the proposal does include a 5-year grandfather clause with the intent of easing investors out of these accounts, I believe it will create the exact opposite effect. After 5-years, the average small investor will face fewer servicing options and increased costs by creating a need for advisors such as myself to charge additional wrap fees of up to 2% to cover my administrative costs for services.
If this proposed rule change goes through I would suggest that at the very minimum the grandfather rule for existing accounts be permanent to preserve business models and client relationships that were regulated and legally disclosed by prospectus when investors made their investments.
Thank you for your consideration of these comments.
Regards,
Nelson
Nelson B. Trichler
Certified Financial Planner
928 Garden Street, Suite 4
Santa Barbara CA 93101