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Finance a la shmoop.. what is a 12b1 fee what a clever name like why dont they give normal names to these things like fund admin expense fee or just name it Bob [Document with Bob written at the top] but they dont so you just have to memorize what they mean anyway mutual funds had to bear enormous communications related expenses in the pre computer-internet everyone has an email address era delivering gobs of [Mail man arrives at house] paperwork snail mail to its customers it was enough expense to them that well they frankly just hated doing it and did more or less anything they could to [Man licking envelopes] avoid having to deliver you know dead trees so along came the investment advisors act of 1940 which basically recognized that mutual funds did in fact have expenses that were more than bonuses to the senior partners the 12b1 fee system allowed a fairly set and standard amount of fees to be charged to customers so that a given mutual fund could recoup the money it had to spend