Subject: SEC Review of Rule 12b-1

July 5, 2007

I urge you to leave the existing 12b-1 rule in place. I concur with the reasons outlined by the FSI listed below, and wish to further emphasize that investors will not be served by the elimination of these fees. I would venture that it allows more good advisors to embrace the idea of trying to provide some help to all. Without the subsidy that the fee provides, spending time and resources on anyone but those paying advisory fees in a larger account would be impractical, if not impossible.

To serve investors, it would be far more advantageous to apply focus to other areas, such as equity indexed products and sales practices. I have repeatedly observed instances where advisers encourage consumers to take the equity out of their homes and buy indexed annuities and life insurance with the proceeds. It seems to me that the interest of investors would be far, far better served in pursuing these types of problems over debating the merit of of a 12b-1 fee that clearly provides positive benefits and has a relatively low cost.

The benefits of 12b-1 fees are numerous and include:

.Expanding Investor Choice - The multiple share classes made possible by Rule 12b-1 give investors choices by providing them with options in how they pay their financial advisor. The flexibility offered by Rule 12b-1 allows financial advisors to tailor a portfolio to their client's specific needs.

.Supporting Financial Literacy - Mutual funds send their investors monthly statements, confirmations, prospectuses, annual reports, and other materials. Financial advisors serve the vital role of educators by helping investors to make sense of these essential materials. 12b-1 fees are the compensation financial advisors receive for these efforts.

.Managing Client Expectations - We all know 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 this common investor traps.

.Insuring 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.

.Subsidizing Additional Services - Independent financial advisors offer their mutual fund clients a variety of additional services including: consolidated account statements, periodic portfolio review meetings, quarterly newsletters, cost basis research, preparation of tax returns, and consulting on other financial decisions. These important services are made possible by the subsidy 12b-1 fees provide.

In conclusion, while it is reasonable to review the investor benefits of 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.


Michael A. Thomas

Mr. Michael Thomas
Independent Financial Advisor
Thomas Capital Management, LLC