Subject: File No. S7-15-10
From: Keith A Raia
Affiliation: Financial Consultant

September 24, 2010

To Whom It May Concern,

The proposed rule changes to 12b-1 fees, if implemented, will have negative unintended consequences to individual investors, particularily smaller investors.

I work inside a credit union, giving investment guidance to its' members. I am not working with the wealthy. The average account I open is $20,000. Most of my clients are unsophisticated and do not want to spend a lot of time understanding and learning investments. They trust me and want me to handle it for them. Otherwise, they would handle it themselves and invest in companies that charge lower fees.

I spend a lot of time with these people, educating them and giving them recommendations and guidance. Not only do I do this at the account opening, I do it on an ongoing basis, typically meeting with a client several times a year.

Most often I use mutual funds to invest my clients' accounts. Over the twelve years I have been in the credit union, I have used four different mutual fund companies. Originally, I used Putnam. They had major difficulties so I changed to Columbia. After they were bought out by Bank of America, the service fell apart so I again switched, this time to Fidelity. During the recent crisis, I again switched, this time to Pimco as they offer tactical funds. This type of investment is working very well in the current environment. However, it is not available at Fidelity. Will Pimco be the place to keep investments a year, two or three from now? No one knows. However, if my client pays an A share commission, they will lose out on that commission by leaving Pimco and pay another one at the new company.

For most clients, I use C share mutual funds. I view this as an asset based charge, similiar to a Wrap account an Advisor would use. I receive a smaller commission up front, but am more tied to the interests of my client. The better the account does, the better I do. The worse it does, the worse I do. I also have more accountability to keep the client happy. If they are dissatisfied after a year and move the account, I have received much less income.

All of this is explained to clients, who most often choose C shares over A shares. They like that our interests are so closely tied. They also like the fact that they can change mutual fund companies after a year without losing the commission they paid up front and without incurring a deferred sales charge.

If the revenue per client I receive decreases, I will not be able to provide the same amount of time that I currently provide to each client as I will have to find more clients to offset the decrease. As a result, the small investor will receive less service, guidance and direction, which are the very things they need

If the proposed rules go into effect, I will be forced to make changes to the way I provide my service. These will include shifting accounts to Advisory Wrap accounts, which will mean an increase in the fees the client is paying. The typical Advisory account charges total fees of 1/2 to 1% more than the typical C share. Again, the client loses.

The proposed rules will be removing choice from the investor, reduce the service they receive and ultimately increase the fees they pay.

Please reconsider the changes. They will truly cause some severe unintended consequences.


Keith Raia
Financial Network Investment Corporation