From: John Bauer [johnrbauer@earthlink.net]
Sent: Wednesday, May 05, 2004 5:48 PM
To: rule-comments@sec.gov
Subject: S7-09-04



The elimination of the 12B-1 would kill the small investor who values a 
financial advisor.  In my practice, I don’t have a client minimum.  If I elect 
to use C shares for a client, where all my compensation comes from ongoing 
12B-1 fees automatically paid by the fund company to my broker-dealer, this is 
how my client pays me for ongoing fund advice as well as financial planning 
advice. Until a client gets to an advisor’s minimum the practice of using C 
shares helps initiate the client that to the concept of “sitting on the same 
side of the table” by aligning shareholder and broker interest.

And in the instance where a broker helps his client with an A share (up front 
commission) and a smaller 12b-1 (.25% basis points) fee, the combination of 
those two together is a much better longer-term deal for the buy and hold 
client (which most people should be) than a broker charging a flat advisor fee 
such as 1% for the life of the relationship.  This is even more evident when a 
client hits the higher breakpoints with larger initial purchases.

This could also affect clients who have $1,000,000 to invest.  If this money 
all goes to the same fund family, the client buys these shares at Net Asset 
Value.  The broker, who presumably is assisting the client with asset 
allocation, fund choices, and probably some financial planning at that level, 
is paid from the 12b-1s.  Again the client has paid less in fees than in the 
typical wrap mutual fund program or separate account platform.

Rather than eliminating this service fee, why not rename it to something that 
actually reflects why the advisor should be receiving this fee in the future.



Thanks,


John R. Bauer 
Mutual Service Corporation