September 15, 2010
Dear Ms. Murphy,
I am writing as an investment professional concerned with the proposed changes in the 12b-1 fee system. I have been an independent financial advisor for 19 years and have developed a successful practice offering advice to about 400 households. My goal has been to always help as many people as I can with solid financial advice during good and bad times. My goal was never to help rich people get richer and therefore, I have never formally capped the level of client I will work with. One of the ways I can afford to help small clients, let`s say investing $200/mo., is the 12b-1 system. The current system allows me to spread say a 1% 12b-1 from a $500,000 client which is $5,000 and use that to help pay for the time on the $200/mo client which on C share I`m making only $24 for the whole year.
Changes being proposed would change this dramatically. Most advisors will be forced to simply say no I can`t work with small clients and will no doubt raise their minimum asset requirements. The small investor and the small investment counselor will be hurt the most. The current Washington political movement seems to be centered around helping the small guy. The change being considered is completely counter to this goal. Why would the SEC purposely want to hurt the chances of small investors to get professional help? Shouldn`t the SEC and other groups be fighting to help assure small investors get the same access to advice as big investors?
Thanks for listening,