Subject: File No. 4-606
From: Sean P McDermott, CFP
Affiliation: Certified Financial Planner

August 4, 2010

I believe the proposed 12(b)-1 fee change will hurt investors seeking professional financial planning advice. As an example, if a young family wanted to seek advice from a financial planner and suppose they have $10,000 to invest into mutual funds. A class C share fund offers them a way of investing without paying an upfront fee and all their money goes to work in the fund right away. The fund then pays the advisory company approximately $100 in commission. Of this $100 in commission, on average 75% goes to the financial planner after the broker dealer takes there share. So now the planner has made $75 in commission for 2 to 4 hours of work. With a class C share the advisor would be compensated $75 per year on an ongoing basis to service this clients planning needs. Under the new proposed regulations, the C share fee would reduce to $25 per year after 4 years (converting to an A share) and the advisor would receive $18 per $10,000 under management. This is not enough compensation to manage a business and help the client with their planning needs.

Advisors would need to start charging planning fees to clients. The small investor would be hurt the most by these new proposals. The small advisor who is just starting into a planning career would also be hurt.

I would recommend not changing the fee structure payout on a class C share fund. Just change the name from 12(b)-1 to something else like advisory fee.