June 16, 2007
I am a registered Rep. and an RIA and currently manage over 100 million. In addition, I'm 38 years old and have recently purchased two financial planning practices. There are several clients we service for only the 12b-1, 25 bps. If this was to be cut it would only do harm to the client. We would have to tell these accounts we cannot service their account unless it is for a fee and we would probably end up moving the account to a fee based platform vs. just staying within the fund group or with their current fund. In adddition, we disclose on our ADV that we may collect a 12b-1 and a fee.
We will not service these accounts for free nor do we work for free as the regulators would like. I have five employee's and a growing family of my own. We field many calls from clients ages 65-90 that we do not charge a fee, because they may not meet our minimums or do not feel it is in their best interest. Many of these 20 year clients of the practices are the less sophisticated one's and would have to move to someone else that would move their account to take them on as a client. I have staff employees that have been with our firm for 16 years assisting these accounts and doing the right thing. If you cut the 12b-1 I cannot service the account or I have to let 16 year employee's go. You put in jeoprody this relationship when they need us most.
Maybe it should be called what it is a service fee. I think this is just semantics over the definition.
Sincerely,
Eric M. Aanes, ChFC, CFS