July 19, 2007
As a financial advisor, part of my compensation is the 12b-1 fee paid out by the various mutual funds we use. The 12b-1 fee helps cover the ongoing service that I provide to my clients (i.e. performance monitoring, appropriate asset allocation, determining tax efficient distribution strategies, rebalancing, etc.), as well as allowing me to pay my staff to provide exceptional clinet service.
I fully disclose this fee to my clients so there is complete transparency on how I am compensated. I have no issue with the SEC requiring better disclosure on 12b-1 fees by our industry (I know that some in our industry do not do a very good job in this area), but I am opposed to eliminating the 12b-1 fees. I feel this is a fair way of compensating me for the ongoing service we provide to our clients and my clients feel the same way. Clearer disclosure is the better path than the elimination of the 12b-1 fees. Thank you for reading my letter and considering my opinion on this matter.