Subject: File No. S7-09-04
From: Edward C Skelly, ChFC

May 6, 2004

My firm is a primarily-fee-based financial advisory firm in
Sterling, Virginia with over 150 clients that we have been assisting for over fifteen years. One of the issues that my firm has long struggled with is whether and how to continue to service our long-standing but smaller clients that would otherwise fail to meet our new client minimums. Their accounts are too small to be forced into a
fee-based model portfolio account, or to use an investment vehicle other than mutual funds. So up until now we have been content to continue servicing them in exchange for the 12b1 fees that we earn on their mutual funds.

Should 12b1 fees be eliminated, it is these people who would suffer the most. Our wealthier clients would either be unaffected or easily adjusted into an equivalent compensation structure not dependent on 12b1 fees. The less affluent would have to be forced into a configuration that is less suitable to their situation in order to
generate the fees necessary to continue to compensate the Advisor that they have grown to rely upon over the years. Alternatively, we would be forced to ask them to seek another Advisor who is willing to work on a transaction-based, commission platform which we believe is far less
advantageous over the long run. They may even be left to fend for themselves if an appropriate advisor can not be found that is willing to work with them with their limited resources.

In my opinion, the role of regulators has always been to ensure that proper disclosure is made so that the public can make informed decisions. It is then up to that public to decide what they want to purchase, from whom they want to purchase it, and how much they want to pay for it.

Cleaning up the conflicts of interest and behind-the-scenes flow of money that has plagued our industry for some time would clearly fall within that realm. But repealing 12b1 fees, legislating or regulating fees and how they can be charged to an informed client, or dictating how
a particular relationship can and can not be structured goes far beyond that scope and violates the most basic principals of our free enterprise system.

I hope that the SEC, other regulators, and our legislators can look beyond the current political frenzy that is taking place in the wake of the recent corporate and mutual fund scandals and use sound judgment to avoid solutions that cause problems worse than the original
problems themselves.


Edward C. Skelly, ChFC, RFC