October 27, 2010
I have been a registered representative for 7 years and found it to be the most difficult way to make a good living there is. Serving middle America which is all I had to work with is not very profitable to say the least and only by struggling for over 5 years was I able to build my client baseto the point where I could consider it a career. Our compensation (the little of it there is) is seemling always under attack and usually these rules are made by those who have no idea what the impact on the financial professional will be. The only one's that tend to make it through these things are the one's that make a lot of money and can withstand. They DON'T work with middle market so that is where the huge gap is created.
I support 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.
However, I strongly object to the SEC permitting mutual funds 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.
As 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 level of individualized advice and ongoing service that we currently provide to our middle and lower market clients.
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.
Please protect the middle class investor as well as the middle income advisor. We need it more than the rich