August 19, 2010
I am writing to express my concern with the proposed changes to 12b-1 fees. As an advisor I help many smaller clients and am compensated by 12b-1 fees. In addition I help many smaller 401k plans and am compensated by 12b-1 fees. If these fees are reduced or limited it will be much more difficult to service these smaller clients. Its likely I will have to institute a minimum asset level which will impact a smaller clients ability to get advice. Its also likely that many of my current clients will move over to a fee based account.
I am always available to my clients but with these changes I will have to be much more careful about who I take on as a client. In addition I may need to drop certain clients.
If you limit our ability to make an income from these smaller clients most advisors will likely not work with smaller clients or require some sort of planning or hourly fee. This will lead to a lot of people not getting advice.
As long as these fees are fully explained and disclosed 12b-1 fees give the client another choice as to how they want to buy into mutual funds and pay for advice.
I am all for greater disclosure and even limiting the 12b-1 to a certain extent but these changes go too far.
Please consider my comments when making policy changes to 12b-1 fees. Thank you.
Certified Financial Planner