November 2, 2007
I am writing in regards to the SEC's ongoing study of the 12b-1 Rule. I can appreciate the need to re-examine the success of this Rule.
I have been in the financial services industry since 1975. During my first 15 years, or so, in the industry, I was a life insurance agent. Although the emphasis there was to always be looking for the next sale, life insurance salesmen were also encouraged to provide prompt, ongoing service to their existing client accounts in order to retain and grow their renewal premium income, and hence, their renewal commission income on those accounts. Renewal commissions provided agents with an incentive to care for their clients. But more importantly, one of the bi-products of that compensation structure, and one that I didn't always appreciate until later on, was that it also encouraged an ongoing personal relationship of trust and service between a salesman and his client. Eventually, this personal relationship would grow and mature into more of an advisory relationship between a trusted agent and his client. This is the pinnacle, in my opinion, of a professional's career. It's not just the income, but those personal relationships that make my job so rewarding.
In the early 90's, because of the emerging retirement and investment planning needs of my aging client base, I saw the potential for continuing those personal relationships within the mutual fund and variable annuity business and I intentionally transitioned to being more of a registered representative. The 12b-1 fees offered me a substitute for the life insurance renewal commission income that I'd forego in the process. And, it has worked out well for both of us. I have had virtually no complaints when it comes to my 12b-1 one fees.
Yet, in view of all this, the one thing that has always stood out to me more than anything else is the importance of the relationship in the conduct of business between two parties. If the relationship is one that has been built over time through frequent contact, honest discussion, and proven results then, everyone wins. Since my transition, I've noticed that my clients look to me for an ever increasing amount of guidance as their choices become more and more numerous and complex. Yet, I've never charged a separate fee for any advice that I've given anyone. The current 12b-1 Rule, and especially, the C share arrangement, seems timely in that it promotes long-term trust relationships between advisors and their clients. And that's exactly what they need in order to solve their financial problems in today's world.
Sincerely,
Mr Richard Dehner
CLU
Dehner Financial Services