Subject: File Number S7-15-10

October 25, 2010

I am writing in regards to the pending regulations regarding 12b-1 fees on mutual funds. I am in support of greater transparency in fees, but feel mutual funds need to maintain flexibility in their ability to implement different fee levels.
In particular, I am concerned about 12b-1 fees and our ability to service smaller 401(k) plans. Many small bsuiness owners want to offer their employees a "full-service" retirement plan. They need guidance on how to structure the plan features, such as matching contributions, profit sharing contributions, Roth option, etc. They also need help with communicating the plan`s features to their employees.
Independent financial advisors like me spend a lot of time educating the business owner and his employees regarding the plan. For most plans, we use a 12b-1 fee of 0.50% (an "R-share") as our method of compensation. That means we receive no compensation while helping the business owner make all the decision involved in establishing a qualified plan and when the plan reaches $100,000 in assets, which takes a couple years for many plans, our annual compensation reaches $500.
If we were not compensated via 12b-1 fees, most business owners would balk at paying out-of-pocket fees for assistance setting up new qualified plans. This could result in many employees not having access to the powerful retirement savings advantages offered by 401(k)s.
Please consider this scenario as you reach your final regulations on these matters. Small businesses, their employees and financial advisors need the flexibility of a 0.50% annual asset charge to compensate the advisor for his guidance and employee education services.

Very truly yours,

Mr. Christopher Borden
Vice president
Canby Financial Advisors