From: Charles C. Zhang
Sent: June 14, 2007
To: rule-comments@sec.gov
Subject: 12B!

I totally agree with Tom James' comments in Registered Rep Magazine on the 12b-1 fee issue (comments listed below). I think all we need to change is the purpose and definition of the fee - "“What they need to do is reconsider the purpose and definition of the fee and call it a sales and marketing assistance and client advisory fee." I urge the SEC to keep the 12b-1 fee for its benefits to clients and advisors. The 12b-1 fee especially helps clients with an average or below average account size.

"Tom James, Chairman and CEO of Raymond James Financial, echoes a sentiment voiced by many in the industry: if the SEC gets rid of 12b-1 fees, it will ultimately hurt customers the most. “All the mutual funds would get switched over to wrap fee accounts and instead of 25 basis points, the customer would be getting charged 50 basis points,” says James. Or if these customers were transferred to asset-based fee accounts, they would likely be paying closer to 1 percent—four times what they typically pay today.
In addition, 12b-1 fees make it economically feasible for advisors to provide advice on smaller accounts, James says. But if they go away, and advisors begin charging asset-based fees instead, these smaller accounts may become too expensive for advisors to manage.
James thinks 12b-1 fees should just be accepted for what they are. They work well for both clients and advisors, he says, especially considering the growth of alternatives like fee-based products, where those fees are often rebated anyway. “What they need to do is reconsider the purpose and definition of the fee and call it a sales and marketing assistance and client advisory fee,” says James. " - Registered Rep Magazine

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Charles C. Zhang, CFP®, MBA, MSFS, ChFC, CLU Senior Financial Advisor An Ameriprise Platinum Financial ServicesSM practice Ameriprise Financial

Zhang & Associates
A financial advisory practice of Ameriprise Financial Services, Inc.