From: Thomas C. Paron, RFC,CFC [mailto:firstname.lastname@example.org]
Dear SEC Commission:
I would like to comment on the proposed mutual fund legislation in particular the elimination of the 12b-1 fee structure.
The proposed bill outlines the elimination of directed brokerage, soft dollar arrangements and 12b-1 fees.
The commission must remember many smaller investors seek assistance. Currently they have two options: 1) do it on your own (Vanguard, T.Rowe Price, ect) or work with an advisor.
Most advisors either work as a commissioned based advisor or fee based or some combination of the two. If the commission eliminated the 12b-1 structure, advisors will be forced to service only the larger clients $250,000 or more in assets.
Who will service the smaller investors????? Is this what the commission is suggesting??? The smaller investors will be forced to work with the no-load families and will essentially be forced to work with someone who they do not have a face to face relationship with.
In addition, the 12b-1 helps keep assets in the current funds. Once your remove the motivation to service the client and keep the assets in place, advisors will be forced to move those assets into a fee based arrangement vs. leaving the assets in place…..
This has become another government witch hunt. The big bad advisor is taking advantage of the small investor. When I hear this reported on NPR that the difference between an investor paying a 12b-1 and one not is the difference in a retiree bagging groceries and one having a comfortable retirement. This is completely irresponsible reporting and is a function of the proposed rule and the opinion of John Bogle, Vanguard….
If this rule is enacted the elimination of the 12b-1 will devastate the industry in a period of unstable markets… Can we afford to implement this without studying the economic impact of the fund industry, broker dealer community, advisor and finally the investor?
I can only hope that the commission has the common sense to move slowly and review all proposals with a fine tooth comb.
If this law passes in its current state, I will terminate my relationship with more then 2500 clients and eliminate the jobs of four staff members and work with a few hundred high net worth clients and become a fee based advisor... I will placed in a position that every time I touch the client a fee will be generated…We will operate like most attorney’s fees for email, letter and out time….
Please feel free to call me at anytime to discuss this in detail. My financial future is at stake!
Thank you for your consideration.
Thomas C. Paron, RFC, CFC
Two Pomperaug Office Park, Suite 301
Securities offered through Walnut Street Securities, Inc. Member NASD & SIPC. Compass Capital Management is a State of Connecticut Registered Investment Advisor.
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