Subject: File No. S7-06-04
From: George G. Goss

March 20, 2004

As a financial planner of 20 years, I have always strived to provide advise and service that is always honest, up-front and in the best interests for my clients. Many times this has meant missing a sale, encourageing clients to file for arbitration against their former broker for churning, etc., and for myself, avoiding the new trends in fee structures as fee based planning that always seem to increase the real cost to the client.

I have no big hitters in my client bases. Accounts range from 2,000 to one account of 1,000,000. My clients are will explained by me their different choices of available fee structures: a, b, c,shares, assets under management by percentage, hourly and single sum contract fees, etc.. I also explain that because I receive a 12B1 fee from most of the mutual funds I recommend, that this fee PAYS me for servicing their account AND providing financial planning services: cash flow, estate, retirement, investment, tax planning and disability, long term care and life insurances. If the 12B1 fees are removed, then I will need to join the fee based planning crowd, increase my fees and charge 1 to 2 percent to cover my expenses and time. The smaller client will probably elect not to pay these fees and therefore not receive any service or end up being churned by another broker. If that is the case, how will removing 12B1 fees helped the small investor?

I am confident that the vast majority of my clients with accounts over 100,000 would pay 1 to 2 percent 1,000 to 2,000 per year for my continued services, but then this is a cost that is at the least 4 times the current cost of their 12B1 fee of 1/4 of 1 percent. So, how does this help these clients? Because the smaller accounts would probable opt out, my fees would require a percentage increase to the 1 to 2 percent, which would then be a little below the industry norm.

Also, 12B1 fees today a not only quite low, usually 1/4 of 1 percent, but because they are included in the net cost of the investment, they are already tax deductable to the client. Whereas by paying a fee based cost and because this cost is only deductable on schedule A, under misc. deductions, many clients will NOT be able to deduct this cost. Lets compare, assumes 25 tax bracket:

Current Situaution:
12B1 fee of 0.0025 after
deduction, the real cost is 0.001875

Proposed Situation:
Management fee of 1.00, after
deduction, assuming client has enough Schedule
A and misc. deductions to qualify for the
deduction, the real cost is 0.75,
the real cost, if unable to take the deduction,
is 1.00

Now, in a honesty, if the 12B1 fees are removed, how does this have a positive effect for the client?

It is for these reasons that I OPPOSE the removal of the 12b1 fees in mutual funds and REITs.

Thank You,
George G. Goss