March 11, 2004
To All Concerned with the proposed SEC Rules 15c2-2 and 15c2-3 as well as the Mutual Fund Reform Act of 2004 and the discontinuation of 12b-1 fees:
I and my two colleagues, CFPs, have been financial planners for over 25 years, servicing middle americans with their comprehensive financial planning needs at a reasonable price. Part of the price that clients pay is through 12b-1 fees, which are taken from their accounts by the mutual fund companies and paid to the representatives to service these accounts. This is an efficient way to bill clients and to pay us, while ensuring the clients receive the service and attention they need. Clients do demand and receive ongoing servicing on these accounts in a variety of ways, in addition to a semi-annual review, at the minimum. If, as a very small business, we had to bill clients for every little service we provide, we would have to add an accounting staff for this purpose. Adding more employees without adding more revenue is a sure way to go out of business and leave middle america helpless with these needs. When you calculate the actual cost of 12b-1 fees for clients, compared with the annual servicing they typically receive, though this revenue is quite small, it helps to pay for some of the costs of running our business, but not all the cost of providing the services clients receive. Every client receives a prospectus that discloses these fees, and we highlight them for the client as well. Which brings me to the other points: we also highlight in these prospectuses the share choices of A,B and C, what they mean, and why we recommend a particular class for their account. We also point out how the CDSC works. We also point out the mutual fund management fees charged to their account. Our clients are well informed. Its already the law that all registered reps present a prospectus before the purchase takes place. As financial planners, we explain these points, since as part of the strategic, time-sensitive planning process, client funds must be available, unencumbered by CDSCs, at various predetermined time intervals, such as funding child education, retirement, a home purchase, and short term emergencies. We exam this openly with clients to ensure their goals are met, not only through risk-managed investment planning, but also unhampered by backend sales charge problems Please treat us like the professionals we are. After all we have spent much time, energy and money acquiring our licenses, credentials, and adhering to strict SEC, and NASD compliance. Do not put the good guys out of business with ever more regulation. We already have those in place, its professionals like us who actually practice them. Work to get to the bottom of these problems, do not throw the financial planner and the client out with the bathwater.