From: Steve P. Hagan
As a RIA , CFP and a registered rep for a broker/dealer, the 12b-1 fees I received from my mutual fund sales are very important to me to continue to provide answers and service to my clients. I operate in a small town in the Mid West. I have been in business over 30 years. I have over 900 clients. My average client size account is about $53,000.....if I was unable to receive compensation on my client accounts through the 12b-1 system I'd have to charge my clients much higher financial planning hourly rate fees, which I believe would discourage them from seeking my advice and therefore having them make their own uninformed financial decisions. This could cause huge mistakes, as most people make financial decision on an emotional not intellectual basis. Presently they just pick up the phone and call me for help without concern about me sending them an invoice in the mail for my assistance.
I suspect most of the problem lies not in the 12b-1 fees, but the communication aspect of those fees to the public and their purpose. Having another disclosure document for the client to sign is not the answer for the confusion, communication or disclosure of the problem....throwing paper at a problem (if there is a problem...(which I don't believe there is), is not an answer.
Steve P. Hagan