November 2, 2010
I am writing as a licensed RR and IAR for 21+ years and an OSJ for 11+ years. Although I strongly support the new 12b-2 rule, which pays me and my downlines for annual client reviews, I am concerned with the concept that allows B/Ds to set their own sales charges and commission schedules on A shares.
Although the intended benefit to middle and lower class clients who have smaller portflios has some merritt, the unintended consequences could be many. Including advisors shifting clients to IAR platforms with higher fees and then failing to see them frequently enough, resulting in a C share orientation and other advisors being unwilling to work with the mid to smaller portfolio size as compensation will be insufficient to cover their costs.
Many small to mid size account holders will be left to their own devices and buy high and sell low through discount platforms who do not offer concsel.
Many B/Ds could be forced to close their doors as larger firms will be able to more easily withstand price compression. Further job loss in an era where unemployment is crippling us.