October 28, 2010
To whom it may concern,
My name is John Klich. I have been a financial representative for 12 years now with a clientele of nearly 450 families and business owners. I am writing to express my staunch opposition to the proposed rule of allowing broker-dealers set their own commission levels.
I am a small business owner that employs 3 people. I am able to pay these people from my revenues, most of which are derived from the 12b-1's I currently receive from my clients investments. To be able to support my operation, I need steady and consistent cash flow. As a small practice, we deliver top-notch service to our clients. However, if broker-dealers were able to create their own commission schedules, those with the BIGGEST operations would derive economies of scale and force people like me to take a paycut. That in turn would lead to me laying off 1-2 of my employees and drastically cutting the quality of the service I provide to my clients. Is this really what the SEC wants?
-Less customer service?
-Less access of lower and middle class investors to professionals?
-Fewer jobs in the financial services sector?
-Less quality control in handling client's money?
If there ever was the law of unintended consequences, this is it The market has set the acceptable levels for 12b-1 compensation already and it is uniform across the board giving EVERYONE a fair and even playing field. By slashing the floor, you will inadvertantly favor the large corporations and force millions of people to retire or find a new line of work.
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. Of my clientele, if these rules were inacted, I would have to immediately severe my relationships with 200-250 people because the small balances in their accounts would no longer justify the overhead I carry and the risks I incur.
I hope the SEC would eliminate this proposal immediately.