May 10, 2004
I am responding to the proposed SEC legislation that would require more disclosure and eliminate 12b-1 fees.
I am an independent financial consultant in my 22nd year of practice. Years ago, I began structuring my practice to have an ongoing income stream, mostly through 12b-1 fees because I did not feel it was in the best interest of my clients for me to have to generate new sales to earn a living. I fully explain the different share class expenses to my clients by showing them this information in the prospectus, how Advisory Accounts work and their expenses, and the level of service that I can give them on an ongoing basis connected with each of the choices. Then my clients CHOOSE what what is best for them and they sign a MUTUAL FUND DISCLOSURE FORM. These ongoing services include:
-Meeting regularly to review
-Performing asset allocations
-Structuring withdrawals to provide income
-Speaking with clients regularly
-Providing tax information to clients and their professionals
-And many, general administrative tasks associated with client accounts, their trusts and their families.
With this arrangement, I am compensated to serve my clients on a continual basis whether they invest new money or not, and I am able to take over existing accounts from new clients without having to liquidate any of their holdings just to generate income to me.
If you eliminate 12b-1 fees, I could not stay in business and I surely could not service the 75 percent of my clients that do not have enough assets to qualify for an Advisory Account. It is reasonable to expect that I should get paid for working on behalf of my clients. The way I have built my practice is totally legal and fully disclosed to my clients.
Please reconsider the elimination of 12b-1 fees as this would put many finanical consultants and planners out of business and MANY MORE CLIENTS WITHOUT FINANCIAL ADVICE AND SERVICE.
Thank you. Leigh Nickel, CLU, ChFC, Registered Representative of Mutual Service Corporation