October 27, 2010
I have been a financial advisor for over 12 years and have reviewed the proposal to change the 12b-1 rule to a new 12b-2 rule. I support the transparency for the 25 basis points for ongoing service and advice. However, I strongly object to the SEC allowing mutual fund companies to issue new shares at NAV and have the broker-dealers set their own fees. This will drive the ongoing fees down in an effort for market share and will hurt the middle to low net worth client because we as advisors need to make a living and many of our clients are the middle to low net worth clients who are doing the best they can to invest for their future and rely on us as advisors for guidance and direction. If broker-dealers drive the ongoing fees down, we as advisors will have to abandon the middle to low investor and focus our efforts to the high net worth to spend our time with them transitioning to a fee based management to be able to make a living. These abandoned investors will then have to turn to "do it yourself" 800 numbers and will be left to their own emotions to make decisions rather than a trained professional. The very people the SEC intends on helping will be hurt the most by this part of the proposal. Again, I strongly object to having broker-dealers set their own rates. Please consider removing that part of the change.
Should you wish to contact me, please feel free to call or email.
Clark F. Ulrich
Heritage Financial Advisors