From: Paul Byma [pgbyma@hotmail.com]
Sent: Wednesday, May 05, 2004 5:28 PM
To: rule-comments@sec.gov
Subject: S7-09-04

I would like to comment on the proposed rule IC-26356 in regards to the
prohibition of 12b-1 fees to finance the distribution of mutual funds.

I have been in the securities business for 27 years.  In those years I have 
sold mutual funds to a number of my clients for their investment needs.  Many 
of these clients invest small amounts of money or invest on a periodic basis.  
When I made my recommendations I base it upon the need and objective of the 
client based upon factors such as time-lines, risk tolerance,& objectives.  I 
make  each persons recommendation based upon their individual situation.  I 
also monitor each clients investments to insure that their objectives are 
being met.  In  monitoring the client accounts I have to review all the 
original factors to see if any  have changed.

I also need to review the fund performance and in most cases re-balance the 
portfolio. In severe corrections such as occured from 2000 through 2002 I need 
to keep in contact with my clients to insure that their objectives and risk 
tolerance have not changed.  I also have to monitor the mutual funds as there 
are the constant mergers of companies, the changes of objectives of the funds, 
and fund manager changes.

This is all important to me as I try to meet the expectations that my 
clients have given to me.  All of the above takes time.  Time that takes away 
from  working and acquiring new clients.  12b-1 funds help compensate me for a 
small portion of the time that I spend giving them my professional services on 
an on going basis. 

My clients are aware of 12b-1 fees and feel they are an inexpensive way of 
providing them on-going management.  What would the cost be to my clients if 
they had to be billed an hourly basis as a fee-based client either by myself 
or by a  fee-based planner.

If 12b-1 funds are removed a number of smaller or independent planners will 
not be able to provide the same level of service to their clients.  My clients 
are already being given misleading information from some of the bigger firms 
and on-line firms.  There job is to meet a quota of a certain fund and they 
are not  adverse to churning accounts to get new business.  I have several 
clients in the  last several years bring me information from firms that work 
in banks, that have no problem in trying to turn a maturing C.D. into mutual 
fund sales.  I and my client may have already agreed that a portion of his 
portfolio should be in bank C.D.'s.

Do you expect that all clients have the knowledge, desire or ability to 
track their own investments.  Many of my best clients are successful business 
men who want me to look after their investments while they run their business.  
They are willing to pay for this.  The same hold true for my client who is 
depositing $50 per month into her 403(b) and wants to be sure she is getting 
the best return for her risk tolerance.

If you eliminate 12b-1 fees I will not be able to spend as much time with 
these clients. What are they to do, most companies are downsizing their 
customer service  departments and referring people to their web sites.  For a 
portion of clients this is fine, for the majority of clients they do not want 
to do this or they would be doing it  all on their own anyway.  I would ask 
you to consider the Tech bandwagon that occurred in the late 90's and the 
ensuing large losses to portfolios.  The majority of my clients did not take 
such large losses as I had their portfolio's balanced and diversified.

Please realize the amount received from my 12b-1 fees in no way pays for the 
ongoing service I give my clients, but it does help to offset some of my other 
costs or time I must spend to do so.  Removing it will hurt the mutual fund 
clients in the long term more than a nominal 12b-1 fee.  Just ask the clients 
that flocked to Janus Funds to get the high returns, and lost in excess of 50% 
of thier returns.

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