From: Sandra M. Pazanin [pazzaz@pazanin.com] Sent: Wednesday, May 05, 2004 9:03 PM To: rule-comments@sec.gov Subject: S7-09-04 To: Jonathon G. Katz, Secretary, U.S. Securities and Exchange Commission: Dear Mr. Katz: I have been in the securities business for 27 years. I have MANY GRATEFUL clients. I have been able to provide my clients with service above and beyond the call of a professional, because the 12-b-1 fees are part of my compensation. For example, today, I spent from 8:30 a.m. to 4:00 pm, door to door, taking a client to an attorney and a seminar about 'special needs trusts'. This woman is 80 years old and needs to utilize these special trusts to protect her disabled sons. Since this is complex and new to her, she needed me to help her to learn about this estate planning tool, as well as to make contact with the right attorney. If 12-b-1 fees were not part of my compensation, I would have had to charge her my hourly fee for the interaction and meetings today. My fees would have been almost $1700 to her if I was forced to charge her hourly. That would have been on top of the attorney's fees, who charges $350/hr. We met with him for 2.5 hours! If I was charging MY hourly fee as well, the client would not have done this. She would have let it go, not embarked on this estate planning, and left her estate and her disabled sons in a mess! OR, this 80 year old woman would have had to try to figure it out for herself! Which she would not have been able to do! Is that what the government thinks is protecting clients? In regards to smaller shareholders, I am constantly receiving calls for administrative services, such as providing, changing or correcting account information. I have to hire a person, pay salary and benefits, payroll tax, FICA, etc. It is very costly for me to hire an admin. If 12b-1 were not part of my compensation, I would have to tell the client to 'do it yourself!' OR pay me an annual retainer, or an upfront processing fee. Is this what the government thinks is good for investors? I also provide analysis and financial planning for shareholders. If 12b-1 were not part of my compensation, I would, again, have to charge the client an hourly fee for EVERY little phone call, request, or calculation, just as attorneys and CPAs currently do. This is the reason that clients get angry with attorneys and CPAs. The client feels that they are being 'nickled and dimed' to death. I don't do that to my clients; but I would have to begin that practice if 12-b-1 was not a part of my compensation. Is this what the government thinks is good for the investor? If 12 b-1 fees were eliminated, clients/investors would suffer. If the SEC were to adopt this rule, it would mean that the SEC does not understand how investors are served by financial advisors. The SEC would be single-handedly responsible for putting investors and clients in a negative situation. I feel confident that the SEC does not desire the above outcomes. You can help to protect clients and investors by guaranteeing that this rule is not adopted! Please think about how the business actually works! Thank you for your consideration. Sandra M. Pazanin, CFP Registered Principal Ca. Ins. License 0630156 1061 Alameda de las Pulgas Belmont, CA 94002 Telephone: (650) 508-1180 Facsimile: (650) 508-0393 E-mail: pazzaz@pazanin.com Website: www.pazanin.com Securities offered through Mutual Service Corporation, Member NASD/SIPC