Subject: SEC Review of Rule 12b-1

October 22, 2007

I am writing to express my concerns about the SEC's ongoing review of Rule 12b-1. Middle class Americans need the continuing service, guidance and support that are provided by independent financial advisors to achieve their stated investment goals.

I live in a small community of about 7000. Most of my clients are not considered wealthy but do what they can to save. Over 200 of them have less than $10,000 invested with us. They want and need someone to talk to regarding their finances but it is difficult to provide this service if I am only compensated at the point of investment.

12b-1 fees provide a tax efficient means to support the continuing service which these clients require for successful investing. 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 paid for by me, but made possible by the subsidy 12b-1 fees provide.

I have built my business over the last 22 years by servicing my clients continually and ethically. As a result, I am hoping that I will have built a business that is worth something to another financial advisor when I am ready to retire and sell the practice. Eliminating 12b-1 fees will make my practice virtually worthless overnight because many of my clients are now retired and not investing any more. No person in his/her right mind would purchase a business with no revenue stream combined with a full time service committment. If a person did purchase it, I'm afraid this would lead to a wholesale churning of accounts in order to generate commissions -- definitely not in the clients' best interests.

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 their financial goals.

Sincerely,

Mike Moffitt
ChFC
Cornerstone Financial Group