Subject: File No. S7-09-04
From: Charles L Stanley, Jr

May 5, 2004

The consumers of the financial services world is largely divided into two groups, those who want professional assistance and those who are do-it-yourselfers. Do-it-yourselfers should have the advantage of pure no-load mutual funds because no one is being paid to help them with their decision making. However, the group that wants help must pay that help in some fashion. Wealthy investors can afford to pay fees to Investment Advisors who provide that help. Less wealthy investors have to rely on commission based brokers. The 12b1 fee allows for a modicum of ongoing income to a broker who sells mutual funds to a client and continues to provide financial advice. Mutual funds are by their nature longer term investments. If there were no 12b1 fee, the only way a broker could be conpensated for helping the smaller investor is to sell something else that would create a new commission. Obviously, the removal of the 12b1 fee will be a government created inducement to churn. The removal of the 12b1 fee would be against the best interest of the investor and the securities broker. It seems that regulators only look at the cost side of the ledger and not at the value side of the ledger. There is clear value received by those who pay 12b1 fees. Dalbar studies have shown that investors who work with advisors fair better than those who go it alone. So, even with the additional internal costs, investors who work with advisors have better investor results.