Subject: File No. S7-09-04
From: Keith A Raia

June 9, 2004

The proposed rule change to eliminate 12b-1 fees will do more harm than good. While it is true that there are advisors collecting ongoing fees while not servicing the account, it is also true that the client has the right to fire that advisor and transfer the account to a new advisor without encurring a sales charge. Eliminating the 12b-1 fee would give such a new advisor no incentive to take on the account because they would not want to work for free. The result will be that the client is trapped with an advisor who doesnt do their job, or the account will be churned by the new advisor to create revenue. The 12b-1 allows advisors to take on an account and get paid for their work, while not harming the client with a second commission. It also rewards an advisor for continuing to work with and provide advice to the client. I read an analogy recently that one shouldnt have to continue to pay a car salesman a commission every year after you buy a car. The difference is that the car salesman is not spending time and effort working for you every year like a quality advisor does. A more appropriate analogy is your Accountant whom you pay every year, not only once.

The focus should be on educating clients to look for a new advisor if their current advisor is not earning the fees that they are collecting. There should also be a focus on ensuring exchanges from one mutual fund family to another are only done in the clients best interest. Those of us who do business ethically should not be penalized because of the few rotten apples who do not.