Subject: File No.
From: Nancy Russell
Affiliation: LUTCF, Registered Representative

October 27, 2010

I have been a licensed insurance professional and registered representative for over 20 years in a mid-sized community of mid-income citizens.
I support new SEC rule 12b-2, which would continue the 25 basis points fee that is used to ensure investors receive ongoing service and advice. And I don't particularly like but will support the SECs proposed use of the terms marketing and service fees and ongoing sales charge in place of 12b-1 fees to improve transparency in disclosure documents.

However, I do strongly OBJECT to the SEC permitting mutual funds to issue a new class of shares at net asset value that would allow broker-dealers to set their own sales charge and commission amount. I'm extremely concerned that allowing broker-dealers to compete based on the commissions they charge and the services they provide will lead to a race to the bottom causing middle market investors to be overly focused on price and ending up without access to valuable advice and ongoing account services. As b/ds slash their fees in an effort to gain market share, it will no longer be financially feasible for registered reps to continue to provide the level of individualized advice and services currently offered. Middle market investors will be deprived of the guidance they need and deserve. Most of my clients are only charged a nomimal amount using the current 25 bps, as the accounts are somewhat small, and they have no complaints with the current system.
Competition based on price and cost sounds good but this proposal comes at a bigger price tag for middle-Americans. Again, as B/D's lower their sales charges and fees in an effort to gain market share, it will no longer be financially feasible for me or other registered representatives to continue providing the level of individualized advice and ongoing service that we currently provide to our middle and lower market clients, service these clients have come to depend on.
As a result, only upper-income investors who can afford assets-under-management arrangements or higher cost/higher service classes of shares will continue to receive personalized investment advice. Investors with smaller fund account balances, and this is the majority of my clients here in Longview, will be forced to self-direct their accounts if they wish to continue to own mutual funds because I will no longer be able to afford to spend the time to guide and advise them, leaving discount brokerage fund platforms as the only affordable option for middle and lower market investors. For most of my clients, this will be a huge headache, and I fear they'll 'cut off their nose inspite of their face', by giving up the opportunities they had planned on having through retirement,and selling their investments.
The people the SEC is trying to protect the most--middle and lower market investors—will be hurt the most, since they will be deprived of the guidance and service they need and deserve. Please re-consider this action.