November 7, 2007
These are follow-up comments that I meant to incorporate in my letter dated 11/02/07. I've read in many posted comments that the shareholder should be given a choice as to how they want to compensate their advisor. The existing A and C share options seem to offer one solution. When an advisor offers advice on a onetime basis, with very little ongoing advice thereafter, then an A share, followed by the .25% 12b-1 service fee could be used to compensate the advisor. On the other hand, where an investor desires a higher level of ongoing service that might include general and incidental tax, retirement, and/or other general planning advice, in addition to the regular investment advice given during a purchase, then a C share could be utilized. This latter arrangement would encourage advisors to render a higher level of ongoing service and advice to their clientele. These two shares classes could benefit clients with differing needs and desires when it comes to their need for ongoi ng general advice.
It is my firm belief that the demand for honest, competent general investment and planning advice will only accelerate as our world becomes more complex and specialized. Many of us have seen our practices evolve from more of a transaction based, selling format to more of an advisory format as our clients increasingly look to us for direction. We didn't choose that path. They've taken us there.
I would be in favor of more simplified disclosure of the 12b-1 fee because my clients find an existing prospectus to be too complex. I spend a lot of time explaining to them what it all means when, ideally, they should be able to read and understand it on their own.
I hope the SEC will take a balanced viewpoint of this matter and, putting all other influences aside, do what's in the best interests of the majority of shareholders. The existing 12b-1 Rule is working and for the cost, many shareholders are getting a bargain in return for all the service and advice that they get from their registered representative. In all due respect, I believe that the main critics of the 12b-1 fee are a minority of do-it-yourselfers that don't want an advisor in the first place. If that is the case then let them go no-load and let the majority use advisor sold funds, if that's what they want to do. The current 12b-1 fee structure is flexible enough to meet everyone's unique needs.
Sincerely,
Mr Richard Dehner
CLU
Dehner Financial Services