March 24, 2004
I do not have any problem with recommendations that require me or my Broker/Dealer to disclose in detail all compensation received from the sale of a security or any other type of commissionable product.
I do, however, feel the SEC should be extremely careful not to go overboard and in effect, regulate the smaller financial planners and practices out of existence through the imposition of an inordinate amount of largely ineffective new paperwork/reporting requirements.
I say ineffective, because I firmly believe you cannot legislate ethical conduct. Regardless of whatever you do those that are ethically impaired will continue to act in ways most of us would find deplorable...if not outright illegal.
One comment about the proposed elimination of 12B-1 fees. As financial planners, we expect and need to be compensated for our services...whether that comes partially in the form of 12B-1 fees or some other means.
As I tell all my clients, I dont really care how they choose to pay me, whether through commissions or fees or some combination of both---but I do expect to be fairly compensated for my services.
Eliminating 12B-1 fees will not save the consumer any money unless Congress also imposes caps on mutual fund profits. Mutual fund companies, like any other consumer business, will continue to pass on to the customer the cost of selling their product--- regardless of whether the charge is labeled as a 12B-1 fee or not.