From: Donald W. Hadley, Jr. |
I have been in the Financial consulting/advisory business since 1966 and my corporation, Capital Analysts of NC Inc., currently has sixty or so clients in twelve different states with the bulk of those clients having been with us longer than ten years. In the early years of my careet, the advice and consulting services I offered were paid for by commissions from product sales resulting from the implementation of my ideas for the betterment of client's situations. Over the years, payment for my services has gradually changed to annual fees charged for both planning services and investment advisory services. For the investment advisory services, the 12b-1 fees are a significant portion of our annual revenues and are taken into account when our other fees are established for our clientele. (in other words, our other fees would be higher if there were no 12b-1 fees). In the long run, it makes little difference to us as to whether the SEC regulates 12b-1 fees out of existence or not. In the short run, it becomes an administrative problem for us if the 12b-1 fees are regulated out of existence since we will have to fit into already very busy schedules the preparation and processing of additional paperwork to increase the current level of non 12b-1 fees in order to compensate for the loss of 12b-1 fees. Based on what I know of the parts of the financial services industry who are working with "retail clients" (big or small) they, like us, would either have to institute annual fee schedules or adjust their existing annual fee schedules upward if 12b-1 fees were terminated. What I do not really understand is, if you folks at the SEC feel that our clients do not understand the fees they are paying for advice and investment advisory services (an assumption that would probably insult most , if not all, of my clients) why not simply give us a one page "simple" disclosure form that we could attach to our current fee scheduls that we send to client's in the regular course of business? It would seem to me that this would save you, us and our clients significant amounts of time and effort that could be better spent in other areas. Thank you for giving me this chance to comment on the current 12b-1 fee issue. Sincerely, Mr. Donald W. Hadley, Jr. |