From: Karl Cole
Sent: April 1, 2005
Subject: File No. S7-06-04

Jonathan G. Katz
Securities and Exchange Commission
450 Fifth Street, NW
Washington, DC 20549-0609

Re: SEC Proposal on Point of Sale and Confirmation Disclosures

Dear Mr. Katz:

As an independent financial advisor for the past 17 years, I am extremely concerned about the SEC's proposed point of sale proposal/confirmation disclosure rules. Being on the "front line", I can assure you that it will have negative impact for investors, and for advisors like me.

Being independent, I am able to offer clients the most appropriate investment vehicles based on an unbiased assessment of their needs. The SEC's proposal will substantially limit the broad universe of mutual funds and variable annuities that I am now able to offer. This would negatively affect hundreds of my clients who currently invest in mutual funds.

Another negative affect this proposal will have is the perception that investors should prioritize cost in their decision. While cost is an important factor, this proposal misleads investors into believing that the lowest cost product is the best. This couldn't be further from the truth. I can show you many funds which have higher operating expenses, and yet they have better long term performance records than low cost index funds. I've attached a sample as proof. You can carry this same point over to many other products in this world. For example, there is a reason why a Mercedes Benz is more expensive than a Kia. In effect, your proposal suggests one should buy the Kia just because it costs less. I think you would agree that is ridiculous.

In the end it will be the investor who will ultimately pays the added cost of implementing this proposal, either through increased fees or by effectively limiting in the number of products offered. My 17 years of experience tells me that the complexity of the proposal will simply confuse investors further. Rather than adopt the current proposal, I urge the SEC to re-focus its efforts on incorporating fee information into a user-friendly prospectus.


Karl Cole, CFP, CFS

Attachment - American Funds Washington Mutual A AWSHX

Attachment - Vanguard 500 Index VFINX