From: Adam Gellis [adam@daviswealth.com]
Sent: Friday, May 07, 2004 12:39 PM
To: rule-comments@sec.gov
Subject: S7-09-04

I am very concerned about the proposed revisions to 12b-1 rules. Here is why:

Ultimately, investors choose to buy a load or a no-load fund.  This decision 
is based, in large part, on whether or not the investor wants advice from a 
financial professional.  Generally, if an investor wants assistance choosing 
the fund in the first place, that investor also seeks advice ongoing.  12b-1 
trails help to compensate the financial professional for the ongoing advice 
that the investor is seeking.  There are plenty of mutual funds available that 
have no load and no 12b-1 trail for those investors that do not want the 
advice of an investment professional.

Should every investor pay 12b-1 trails?  No.  Only those investors that seek 
the guidance of a financial professional should pay 12b-1 fees.  I fear for 
the investor who buys a fund but has difficulty getting ongoing advice about 
the fund because the financial professional gets no compensation unless a new 
fund is sold.  This puts investor interests and broker interests at odds.  We 
should be finding ways to but the investor and the broker on the SAME side of 
the table.  While advisory relationships do put investors and brokers on the 
same side of the table, many smaller investors are not appropriate for 
advisory relationships.  

In my opinion, outright abolishing 12b-1 rules will hurt the smaller 
investors.  Instead, investors should be made well aware of whether or not the 
funds they buy have 12b-1 charges in them.  Thank you for your consideration

 

Adam Gellis

Davis Wealth Enhancement Group

800.896.5422