LWA NEWS

• Diahann was interviewed concerning the Mutual Fund Scandal on NBC Nightly News.  This show was delayed by an Orange Alert and aired December 28, 2003 which was the Sunday after it was scheduled.  She also appeared on CNBC on December 29, 2003 discussing ETFs and their advantages and disadvantages. 

• Diahann will be speaking at the Rothman Institute of Entrepreneurial Studies at Fairleigh Dickinson University in Madison, New Jersey, on February 6, 2004.  The topic will be “Focusing on the Future: Growing Your Company in a Competitive Environment.”

• As many of you are aware, Diahann has been selected for the Worth Top Advisors List 5 times, including the first Top 60 List published in 1994.  Worth Magazine has revamped the list and published it this year as the Most Exclusive 100.  We are pleased to announce that Diahann was selected for this list. 

• Jennifer Liguori has joined us this year.  She’s an attorney focusing in the tax area.  She will be here full time in tax season, and will play an active role in the management of our tax section.  She will be working closely with Clare.   

• Since Jonne Morris has been promoted to Investment Associate, she won’t be able to devote as much time to the Tax Group this year.  For that reason, Purvi Shah has joined us to fill in full time through April.  Purvi is a CPA equivalent in India and has sat for the CPA exam here in the U.S.

• Suzanne C. Low, J.D., CFP^® recently conducted a seminar on “Investing for a Secure Future” for the “Women Take Charge of Your Money” program at the University of Florida Extension. She also wrote an article for the Estate Planning Council special supplement in the Naples Daily News to be published on March 23, 2004, on “Death of a Spouse: How to Deal with the Critical Financial Issues.” 

• LWA continues to participate in answering questions in the “Biz Brain” column of the Star Ledger.

• In January, LWA participated in the “Womenomics” seminar sponsored by the Summit Business and Professional Women.  The half-day program featured four different sessions covering the following topics: women in politics, work-life balance, intergenerational issues and financial and investment planning. In the forum titled, “Building Your Assets to Achieve Financial Independence,” Jodi Cirignano, CFP^® from LWA, led a discussion on setting financial goals, meeting challenges, and remaining disciplined throughout the process. 

Medjet Assistance Program Can Get You Home!

Betty S. Thomas

If you travel a lot you may sometimes have concerns about being sick and far from home.  When you travel for pleasure or business, there can be nothing worse than becoming ill or having to be hospitalized in a foreign country or even elsewhere in this country.  The cost to arrange transportation home can be astronomical.  The Medjet Assistance Program provides a way home that is cost effective and can put our minds at ease.  With this program we know we can be treated by our own physicians, in a hospital of our choice, close to home.    

Medjet Assistance is an annual prepaid air medical transportation membership program for people who travel.  Membership provides you a way home should you become ill or are injured more than 150 miles from your primary residence.  If you are hospitalized virtually anywhere in the world, Medjet Assistance can dispatch a specially equipped aircraft with a  medical team to bring you to your home hospital or a hospital of your choice so you can be treated by your personal physician and be close to your family. These services are provided 24 hours a day, 365 days a year.  As with any program, there are restrictions.

 It is a cost effective service for those who travel a lot.  A regular annual membership for an individual is $195 and $295 for a family (primary member and spouse and up to five unmarried dependent children).   There are other plans available such as coverage for a specific trip.   

If you would like more information on The Medjet Assistance Program please give us a call.

What About the Mutual Fund Scandal?

Diahann W. Lassus, CFP^®, CPA 

Now that some of the dust has settled on the mutual fund scandal it’s time to take another look.  2003 was certainly a rotten year for fund ethics.  Since last September at least 17 investment companies have been roped into the scandal, including such well-known groups as Putnam, Strong, Janus and Alliance Capital.  Accusations have led to resignations of three top fund company executives. 

Investors are looking for regulatory action to help clean up the mess, and new rules may be on the way.  It is important to remember that mutual funds are still one of the best ways to save and invest.  For every questionable company, there are many more well-run, ethical fund groups.

Here are a couple of questions and answers to help you understand what is happening. 

How will the scandals affect my portfolio? 

There are several ways you could have been affected.  You might have held a fund in the fund families that have been accused of wrongdoing, but remember that no one stole any money out of your account.  Instead, a few investors benefited unfairly.  Some of the impropriety involved late trading, or buying funds at outdated prices after the market closed, which is illegal. 

Even if you owned a fund where improper trading occurred, so far it appears that the cost to any single investor was quite small – likely less than 1% on a dollar.  Our faith in the ethical safeguards at the funds has been justifiably shaken but fund balances should be only marginally affected.  And most fund companies have promised to reimburse shareholders.  We are monitoring this to see how it will be administered.  Any settlements or reimbursements will likely be very small on a per investor basis.

 What happens if my fund fails? 

Your money is safe.  Under the Investment Company Act of 1940, which governs the industry, each fund is set up as an individual corporate entity, with its own board of directors.  The fund hires the fund company to manage its assets.  If the company were to file bankruptcy, its creditors would not be able to touch the fund’s assets.  And the fund’s directors could immediately hire a new manager, pending shareholder approval.

If a fund we hold is involved, should we just bail out immediately?   

We have reviewed funds where we believe the employees have violated our trust.  We have reviewed funds based upon risk, tax consequences and our confidence in management’s ability to deliver the performance we expect.  We have moved out of several funds but see no reason for major shifts at this point in time.  We continue to have confidence in the funds we recommend.

 Will the government fix all these problems? 

 At the moment, there are various groups with competing efforts to crack down on the industry, including four reform bills in Congress.  Among the provisions being discussed are more independent directors, a larger role for compliance officers and fuller fee disclosures. 

The SEC has put forward its own proposal requiring that all fund trades be completed by 4:00 p.m. (ET) to cut off late trading.   Others like Spitzer are pushing funds to lower fees and expenses which we certainly support. 

Many of these rule-making efforts may pay off for investors, although it’s far from clear what will come to pass.  In the end, it seems likely that the industry will focus more on ethics and fiduciary responsibility --- and that’s certainly positive.   

ENJOY THE WINTER, STAY SAFE AND STAY WARM.  J

back