From: Alan Morgan |
Gentlemen: While I am a registered representative and count on 12B-1 fees to support me, the following is my opinion as what effect the elimination of these fees will have on my clients. Most of my clients are blue collar workers who have invested less than $100,000. The 12B-1 fees allow me to meet with clients at least annually to discuss issues that benefit them such as contributing more to 401K plans,tax savings, education funding, and retirement planning. If you eliminate the 12B-1 fees and do not replace it with a service fee, I could no longer afford to meet with these clients. They will not pay hourly fees for such service. They are not accustomed to paying fees. If you eliminate the 12B-1 fees and replace it with a service charge, what will you accomplish? It may cause confusion with clients. An issue that does not apply to me will be that lost rep revenue could lead some dishonest reps to replace revenue through churning ( selling one mutual fund and replacing with a second fund to create a new commission). Obviously,no one wants this to happen. Most clients have seen a big increase in their portfolio over the last few years even with 12B-1 fees. I encourage you to not eliminate or change the 12B-1 fee which would have a negative impact on both client and rep. Alan Morgan |