From: Michael Ulanich |
Nancy M Morris Nancy Morris: I know you are getting a lot of "Canned Responses" to Rule 12B-1 fee retention. This is not canned. As a registered representative, I support the retention of Rule 12B-1 fees. Every year I come across people who have nowhere to turn for advice on the mutual fund products they own. Their situations or the original representative's situations have changed over the years. (Perhaps a move, a job loss, a divorce, prior poor investment choices, a ...) The 12B-1 fees can be an incentive to begin a new relationship, if the potential client will change brokers. These "Clients-Without-Brokers" are ORPHANED. Without additional new investments or an asset-based fee agreement there is no business reason to assist that client, especially those with few financial assets - the small investor. Financial literacy is lacking and Social Security is troubled. Who will help? As baby boomers retire, move, and then begin look for portfolio advice, the continuation of 12B-1 fees are important to the very folks the SEC is charged to protect, THE PUBLIC. Also, I hope the SEC will carefully look at a probable UNINTENDED CONSEQUENCE of revising the Rule 12B-1 in which Asset-Based Fee Relationships are thrust on existing clients. They would then incure higher annual total expenses than they currently pay. Those clients are at risk of becoming ORPHANED CLIENTS themselves, as some brokers ask them to sever their current relationship, or agree to asset based fees which exceed their current 12B-1 fees. I think we all are life-time investors. I do not believe the choice is as simple as having a broker to contact or an 800 number to call. I know of no fund company's shareholder service department that provides ongoing customized product advice or recommendations fitted to the client's situation, and then monitors and follows-up on those recommendations. 1-800-FREE-ADVICE isn't a viable option. The client-broker relationship is an important benefit to the individual investor. The 12B-1 fees separate from other expenses and adequately disclosed. The SEC should maintain the investor and broker benefits of Rule 12B-1. Thank you for reviewing my views. Sincerely, Michael Ulanich |