Subject: SEC Review of Rule 12b-1

July 5, 2007

I am writing to urge the SEC to understand the benefits provided to consumers via the 12b-1 fees. These allow us to provide ongoing service to our clients without forcing them to pay an annual fee for said services. The majority of my clients pay less in 12b-1 fees than they would via an annual planning fee. My clients receive an annual review, asset allocation and other planning services that would cost considerably more if paid for via an hourly fee.

As Joe Russo noted in his remarks, "Middle class Americans need the continuing service, guidance and support that are provided by independent financial advisors to achieve their stated investment goals. 12b-1 fees provide a tax efficient means to support the continuing service which these clients require for successful investing."

It is of particular importance that we assist in managing client expectations. Having an advisor continue to assist them helps them avoid the common mistakes investors make; buying high and selling low, chasing past performance and harboring unrealistic expectations. 12b-1 fees provide financial advisors with compensation to manage their client's expectations and protect them from falling into these common investor traps.

As I noted earlier, 12b-1 fees help insure small accounts receive service. Investment advisory services are simply out of the reach of many small account holders. Financial advisors must have another means of being fairly compensated for servicing these accounts. 12b-1 fees provide the mechanism to insure small investors receive the support and service they need to achieve their financial goals. Frequently, a client from whom I earn $20-$100 a year in 12b-1 fees receives services that I would price at $600-$1000 a year. Why? Because I don't charge them a separate fee for asset allocation and financial planning. It's enabled many young couples to begin planning and saving without "breaking the bank."

In conclusion, while it is reasonable to rename the fee to reflect the benefits the investor receives via the 12b-1 fees, it is obvious that the repeal of 12b-1 has the potential to cause great harm to thousands of individual investors who need the support and service of a trained financial advisor. As a result, I urge the SEC to allow Rule 12b-1 to continue to support my efforts to provide needed financial services to middle class American investors pursuing the financial goals.


Kate Marvel
Marvel Financial Planning, Inc.