12(b)-1 fees pay for more than just hand-holding

I have a solution for Lee Feldman's salespeople who are worried about losing their income derived from 12(b)-1 fees (“Keeping 12(b)-1 fees discourages churning,” Feb. 1). All they have to do is tell prospective clients about the many fine no-load funds available to them. That way, the salesperson will be free of having to hand-hold his clients, resolve their administrative glitches and give away all that “free” advice. Salespeople who are really good at their jobs would probably be able to convince large-scale investors that the services they provide are well worth the cost. But those investors should be told that no matter how much they invest in mutual funds, they will pay 12(b)-1 fees on every share, year after year, as long as the mutual funds are held. The advice that they receive is hardly free, and a lot of what the high-end investors pay in 12(b)-1 fees is bound to be spent on the kind of nuisance clients that Mr. Feldman, president of the Association of Counselors for Equity Securities, wrote about, if any of those clients are still around. The Financial Planning Coalition has proposed a fiduciary standard of care that could be met by commission-based financial advisers if they disclose “all material information to the client, including that the adviser's receipt of a commission in the sale of the product presents a conflict of interest.” If that ever happens, it would be interesting to see how much of the $13 billion paid annually by investors in 12(b)-1 fees is actually used for hand-holding and resolving administrative glitches. Richard Almeida Financial planner Balliett Financial Services Inc. Winter Park, Fla.

Roth IRA conversion isn't all-or-nothing decision

In response to Andrew Rice's “Roth conversions: The gamble of a lifetime” Viewpoint column in the Feb. 1 issue, I find fault with several of his reasons to not consider the new Roth individual retirement account conversion opportunities. First, he writes as if it is an all-or-nothing conversion decision. Mr. Rice starts out by speaking of the stock market as too risky, when in fact risk management through diversification is our job and the reason people hire financial advisers and planners. At our firm, we take a “carve-out” approach to Roth conversion planning, specifically to create tax diversification. For charitable-minded clients, it is prudent to have tax diversification such as tax-free or tax-deferred money from which to choose. The same argument can be made for long-term-care considerations. I have had clients who used their qualified money to pay the cost of care and recovered to have tax-free buckets available to them, their spouse and their children. For most people, having alternative buckets of tax-diversified assets will serve them best, regardless of what tax rates are in effect 10 to 15 years from now. John R. Berlet Chief executive Boomers Advisory Group LLC Austin, Texas