From: Eric Connors [econnors@enter.net]
Sent: Thursday, May 06, 2004 11:09 AM
To: rule-comments@sec.gov
Subject: File Number S7-09-04

RE:  File # S7-09-04
        Elimination of 12b-1 fees


To whom it may concern:

I am a registered representative and a principal with Mutual Service 
Corporation. I am self employed and have been in the financial service 
industry for 32 years. I am 54 years old.  

My costs of doing business due to the regulatory climate as well as ongoing 
technology updates have risen sharply and my income relative to my efforts has 
been severely cut.  It is 12B-1 service fees from mutual fund clients that our 
office receives which enables me to service these many smaller investors. 

I do not charge fees and am very much service oriented. I believe in the 
philosophy of " Serve First". I meet regularly with clients and perform all 
the administrative and investment functions for them as it pertains to their 
funds. Are you aware of the time involved in working with clients to help them 
meet and implement their financial goals and objectives of life as well as the 
services provided to their family members during times of crisis such as 
death, disability, divorce, business failures, etc.

How about the calculation of "cost basis" for clients that sell shares in 
mutual funds. Do you know how much time I spend doing this for clients who 
have no idea how to do it .... and their accountants don't want to !  I had an 
accountant this year who said he would not calculate for a client .... but if 
he was forced to do it he would charge his $100/hour rate. Well I did it for 
the client and it took me over 8 hours because of the many funds involved. I 
had to order all the transcripts dating back to the early 1980's and then do 
all the laborious calculations.  I save the client over $ 800 in accounting 
fees. My compensation was  few dollars a year in 12 be-1 fees !

I have worked for over 30 years and the 12b-1 fees only assist me in the 
overhead of my office. They are not a profit center !

I have resisted the movement to charge clients fees for services because I 
don't think it is right. I have seen folks come to me because of the "fee 
based" movement wherein you find advisors charging anywhere from 1-3 % of 
client assets.

I oppose this and will not go this direction. It is not right for the client.

I could increase my income many fold by adopting a fee based platform .... but 
I have "settled"  for the minimal ( by comparison ) 12b-1 fees.

Believe me when I say without the 12b-1 fees I will be out of business. I have 
not worked for all these years (and at this stage in life) to be consumed with 
overhead expenses and the loss of the income which helps to offset the costs 
of providing the necessary service to clients.  I will not cut or sacrifice 
the service to clients either !

I really am not kidding when I say that I will close my office should we be 
denied the minimal compensation provided by 12b-1 fees.  I cannot forfeit this 
source of service revenue and I cannot absorb any further increases in costs 
resulting from this loss of revenue. I am serious about this and I assure you 
numbers of other independents like myself are of like mind. 

Also,  what you will find is that those who remain will shift to a fee based 
platform and that will cost the investment consumer much more than what is 
being extracted in the form of 12b-1 fees.

Will government then eliminate renewal commission from insurance products and 
other service related fees that we find in other industries as well ?

To eliminate the 12b-1 fees will have a negative impact on both the advisors 
and the consumers. Consumers now have the choice whether they want to use 
funds with 12b-1 fees.... or funds without them. They can use no load funds -  
or work with an advisor and pay a load or a fee. If the loads and fees are so 
negative and abusive the market for these types of products will dry up .... 
right ?

It all depends on whether they want the advice and assistance of an advisor. 
You can change the oil in your car yourself or pay one to do it for 2-3 times 
the cost.

Please understand and give careful consideration to the elimination of this 
valuable source of revenue which allows for the the investment advisor to 
provide needed services to the investing public who, in turn, have the option 
of whether or not to even use advisors or funds that provide 12b-1 fees.    If 
clients want the services we as advisors must derive some compensation.

After 30 plus years of working with families and businesses ..... the service 
component of my business represents the single largest element of time 
consumption. It is done with joy and thankfulness for those clients who have 
placed their confidence in us ...... but it CANNOT be done without some form 
of compensation which the 12b-1 fees have provided.
  
Please don't put independents like us out of business or subject the 
investment consumer to a whole host of problems and ultimately increased costs 
which will come for fees charged in one way or another. As I said the service 
component of my business is substantial and I cannot perform it without 
compensation. 

Thank you for your consideration !



Eric J. Connors
econnors@enter.net

610  395-7744     Office