From: Retire Brokewithaefa [retirebrokewithaefa@yahoo.com]
Sent: Monday, January 26, 2004 11:41 AM
To: rule-comments@sec.gov
Subject: (s7-29-03) Mutual and Advisory reform

Jonathan G. Katz, Secretary
Securities and Exchange Commission,
450 Fifth Street, NW
Washington, DC 20549-0609

Dear Mr. Katz,

Thank you for allowing me the opportunity to comment
on the proposed rule that will require mutual fund
companies to disclose key figures to the investing
public. Since my only dealings with the mutual fund
and advisory industry are through American Express
Financial Advisors (“AEFA”), I will use my AEFA
experience to comment on the proposed changes I’d like
seen in the above mentioned industries.

As an individual investor, I support complete
disclosure of all expenses related to a mutual fund in
a concise easy to ready format. Unfortunately, these
mutual fund companies like to bury figures they don't
want you to readily see deep into the prospectus and
in fine print. From looking at AEFAs annuity and life
insurance prospectus, you'll see each one of these is
about 100 pages long and the prospectus is primarily
written in legalese terms making the decipher task
much harder for the individual investor.  In my
opinion, the prospectus language is by design to
create confusion. I support that the SEC require that
advisory firms provide an investor a separate sheet
that shows how much an investor will pay per year on a
mutual fund. Moreover, this sheet should also take
into account any breakpoints given to the investor.
Furthermore, this sheet shall take into account any
management fees that are routinely charged by
companies like AEFA. When someone buys a car in the
US, by law, the costs and APR have to be given to the
customer in a concise form. Unfortunately unlike the
auto industry, the advisory/mutual fund industry can
hide costs deep in the prospectus and the individual
investor will not be able to readily see what a fund
costs. Moreover, firms like AEFA offer low “teaser”
mutual fund costs and in a couple of years they raise
the cost on a mutual fund to improve AEFAs bottom line
While the SEC is on the subject of investor reform,

I’d like to comment on other practices of companies
like AEFA.  As the SEC has recently announced, the SEC
is looking into advisory companies being paid more to
promote one mutual fund over another. As a former
client of AEFA, it has come to my attention via
AmexSux.com that AEFA “hand-picks” their “select
non-proprietary mutual funds” by whoever pays AEFA the
most to be listed as a “preferred fund”. Unfortunately
for the unsuspecting client, AEFA never discloses to
the client that a pay to be preferred scheme is used
when “recommending” a mutual fund. You’ll see on AEFAs
web site they’ll promote “trusted financial advice”
and they go so far to include “Financial Advisors” in
the name of the company. Unfortunately, you cannot
have trusted financial advice with the pay to be
preferred scheme as well as the myriad of potential
conflicts of interest.

Fortunately for the individual investor, Eliot Spitzer
has crusaded for the individual investor. In typical
government fashion, the SEC chose to ignore the issues
and then once the issues were revealed by Mr. Spitzer
the SEC/NASD jumped on the bandwagon to say they
helped to promote the reform. Unfortunately for the
SEC, the American people are not gullible enough to
believe the SEC/NASD had any hand in the initial
mutual fund reform.

I am requesting that you do not edit this letter in
any form or I’ll deem that “public comments” are not
really public to the SEC.

Regards,
Gerry Jackson
Individual Investor and member of Amexsux.com

__________________________________
Do you Yahoo!?
New Yahoo! Photos - easier uploading and sharing.
http://photos.yahoo.com/