October 27, 2010
To whom it may concern:
I have been a insurance/financial services professional for almost 7 years. I am supported of the new SEC rule 12b-2 that has been proposed. However, I strongly disagree with the SEC wanting to permit mutual funds to issue a new class of shares at new asset value which would allow broker-dealers to set their own sales charge and commission amount.
I know this proposed change is geared toward protecting the middle-class/everyday American who wishes to invest, which I am all for. However, this would certainly create competition in the industry, but in the wrong context. The middle-class investors are the individuals who like to shop around for their financial products, specifically mutual funds and life insurance. This new rule would have the effect similar to consumers in the insurance market who go for lowest cost, not most cost effective. As we have seen since well before I came into the business the "low cost" provider has in most cases faltered and has been bought by a larger carrier or forced to close its doors. The result: clients and their families don't know who to contact or where to go for service because the book of business that had been purchased by the larger carrier has not been served, it was only purchased to boost corporate books/records.
Similarly, if this change is passed, the middle-class investor will look for the "lowest cost" funds which unbeknownst to them does not provide adequate service to satisfy the clients' needs and expectations. This will ultimately cause more frustration for clients and lack of trust in financial institutions, resulting in fewer Americans investing for their future and relying on Social Security.
I encourage you not to allow the SEC to permit mutual funds to issue a new class of shares at net asset value, as it would cause a spiral effect of problems to individuals, financial institutions, and the Social Security System, which cannot afford to have any more problems than it currently has.
Thomas P. McCarty
Financial Services Professional
President's Council Agent
New York Life / NYLIFE Securities
200 Meeting St. Suite 202
Charleston, SC 29401