Subject: File No. S7-15-10
From: Joseph E Froehle
Affiliation: Vice President- Investments, Wells Fargo Advisors

October 15, 2010

I have 17 years experience in the Financial Services Industry, with the past 10 years being a registered Financial Advisor. I am concerned that the proposed changes to the mutual fund 12-1 fee rules will hurt small investors who use Financial Advisors by removing the option for small investors to purchase C shares.

For a small uneducated investor who wants to use a Financial Advisor, "C shares" are commonly an ideal way for that investor to invest in a mutual fund without paying the large upfront sales charges of A shares. If the small investor purchases the A share and pays the sales charge upfront, he is essentially committing himself to own that fund for 8-10 years to make the purchase financially more beneficial to himself than purchasing a "C share". If the mutual fund underperforms its benchmark, if there is a manager change, or if another adverse change happens after the small investor buys an A share and pays 4.5%-5.75% upfront, he may feel obligated to hold the mutual fund even though it may be in his best interest to sell it. "C shares" take away this conflict.

"C shares" allow the small investor to pay for my advice and for the mutual fund over time. "C shares" encourage an ongoing Advising relationship, which is much more valuable to an investor than a one time transaction approach which is inherit in an A share transaction. "C shares" put Advisors and small investors on the same side of the table, from a cost- benefit perspective. If my advice is bad, the "C share" investor can sell the mutual fund after 1 year without paying any upfront or backend sales charge. This is very valuable to managing the small investors portfolio.

Furthermore, "C shares" allow small investors to diversify across several mutual fund families and take a Best in class approach using several mutual fund families. If only "A shares" were available, small investors using several mutual fund families may not reach the break points offered by "A shares" within one mutual fund family.

Mutual fund "A shares" punish small investors by requiring an upfront sales charge, while someone purchasing $1 million of the same mutual fund, does not have to pay a sales charge. "C shares" reduce this penalty to small investors who own the funds for less than8-10 years. In many cases, the problem is with the upfront sales charges of A shares, not with the higher 12-1 fees of C shares which incent Financial Advisors to provide good investment advice to investors long after the initial purchase of the mutual fund.

Some in the Industry say that Financial Advisors should now change their business model so that small investors buy the Institutional share class of a mutual fund within an Advisor Account and then pay a 1% annual Advisory Fee. With the mutual funds I commonly recommend, my clients could possibly be worse off. Many of the mutual funds I use, such as FCISX and IAALX are C shares where the annual 12-1 fees are only .50%-.65% higher than the 12-1 fees within the A shares. Therefore, if I stop offering C shares and begin offering A shares or Institutional shares and charge an Advisory Fee of 1%, they would be paying a higher percentage fee than they would in a C share.

Please think carefully about these details before decisions are made with the unintended consequence of being detrimental to small investors.