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12b-1 fees will not be modified...now
Old 03-27-2009, 02:29 PM   #1
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12b-1 fees will not be modified...now

Of course the financial planning industry does not want their access to the easy money that these fees sap from Mutual Fund investor profits. I was really sorry to see this thing get thrown to the wayside. I have always stayed away from funds that soak, steal, bamboozle charge this fee so it has never hurt my investment returns however, many of my fellow Americans are beat up annually to the tune of billions of dollars by this rule alone.

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The Securities and Exchange Commission has decided to no longer pursue this year repealing or modifying Rule 12b-1. At the Investment Company Institute’s 4th Annual Mutual Fund Leadership conference March 23 in Palm Desert, California, Andrew “Buddy” Donohue, director of the SEC’s Division of Investment Management, said he believes that it would be “wise…in the current market environment, for us to defer consideration of rule 12b-1 reform for this year.”
SEC Won’t Pursue 12b-1 Reform
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Old 03-27-2009, 02:37 PM   #2
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Originally Posted by mickeyd View Post
Of course the financial planning industry does not want their access to the easy money that these fees sap from Mutual Funnd investor profits. I was really sorry to see this thing get thrown to the wayside. I have always stayed away from funds that soak, steal, bamboozle charge this fee so it has never hurt my investment returns however, many of my fellow Americans are beat up annually to the tune of billions of dollars by this rule alone.SEC Won’t Pursue 12b-1 Reform
There's a big lobbying effort by the financial industry to keep them. However, fund companies have publicly stated they would be ok with it if they could set their own version of the 12b-1 and call it a marketing fee......
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Old 03-27-2009, 02:38 PM   #3
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I support the right of mutual funds to charge this fee -- but there should be better disclosure and transparency, AND it should be called what it is -- a marketing fee that has nothing to do with legitimate expenses of running the fund, paying the managers or making trades.
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Old 03-27-2009, 02:49 PM   #4
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I support the right of mutual funds to charge this fee -- but there should be better disclosure and transparency, AND it should be called what it is -- a marketing fee that has nothing to do with legitimate expenses of running the fund, paying the managers or making trades.
Just curious Ziggy, why you would support this one-sided larceny at all? I agree with your idea that, if it is to remain, that it be clearly stated what they are actually being charged for rather than the extremely vague "12b-1 fee."

How about: "Extra charge that comes directly from your total return that will in no way help you, but will make the salesmen more wealthy". Or, is that too strong?
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Old 03-27-2009, 02:54 PM   #5
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Originally Posted by mickeyd View Post
Just curious Ziggy, why you would support this one-sided larceny at all? I agree with your idea that, if it is to remain, that it be clearly stated what they are actually being charged for rather than the extremely vague "12b-1 fee."

How about: "Extra charge that comes directly from your total return that will in no way help you, but will make the salesmen more wealthy". Or, is that too strong?
If they did away with 12B-1's, 80% of the Ed Jones brokers would be out of business........
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Old 03-27-2009, 02:55 PM   #6
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Just curious Ziggy, why you would support this one-sided larceny at all? I agree with your idea that, if it is to remain, that it be clearly stated what they are actually being charged for rather than the extremely vague "12b-1 fee."
Because I think they have the right to charge what they want -- as long as there is full disclosure and complete transparency -- and a more apt description of what the fee is (for marketing crap) and what it's NOT (anything that contributes to better fund returns).

It's not that I support the *decision* to charge this garbage, but I think a private business has the right to set its own pricing -- again, with appropriate disclosure and transparency. Having said that, I wouldn't use a fund that charged one and if I were asked my opinion of funds that charged them I'd suggest people look elsewhere.
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