Archive for the ‘Uncategorized’ Category

Edited by CRISTINA LOUROSA-RICARDO

Federal regulators are finishing a plan to make money-market funds safer, but critics say the proposal could ruin their appeal for many savers.

The Securities and Exchange Commission is expected to unveil in the coming weeks a two-part plan to stabilize money funds, which are short-term investment vehicles used by individual investors and institutions to park cash.

The SEC’s goal is to limit losses for shareholders during times of financial stress, such as in 2008 when one fund “broke the buck,” or fell below the steady $1-per-share asset value that investors have come to expect. Investors have also worried about money-market funds’ exposure to the European debt crisis; the current proposal would require fund firms to set aside more capital to boost liquidity, and perhaps put restrictions on how quickly investors can access their money.

But while the measures may shore up the money-fund market, critics say they could also lead to fewer options and higher fees for investors.

In recent years, firms have been waiving fees in an effort to keep yields above zero for investors and they’ve just barely been successful: the average yield on a taxable money-market fund is .02%, according to iMoneyNet, a money-market fund researcher.

Many fund providers have been forced to cut back their offerings or get out of the business completely. And the new requirements could force “more providers to exit the money-fund business,” says Greg McBride, senior financial analyst for Bankrate.com.

The proposal comes as investors, less spooked by the stock market and searching for better yields elsewhere, have been bailing from the funds. Assets in money-market funds have dropped to $2.7 trillion now from a peak of $3.9 trillion in 2009, according to the Investment Company Institute.

The proposal still needs to be voted on and could change before it is approved, with at least three of the five commissioners needed to approve the proposals before submitting them for public comment.

—Jonnelle Marte

Real-Time Advice Blog

SmartMoney.com

Fewer Quitters

The U.S. job market is finally growing stronger by almost every key measure, except one: Not enough people are quitting.

A humming economy usually means a high rate of “churn” in the work force: employees voluntarily leaving one job for another in search of higher pay and new challenges. One worker’s exit from a job opens the way for someone else to jump on to the ladder.

But through the recent recession and recovery, that churning process has slowed and shows little sign of picking up. New data released last week showed fewer than two million Americans quit their jobs in December, compared with about three million a month, on average, before the recession.

Quitting is a critical element of a flexible labor market, freeing up jobs that can be taken by new graduates, unemployed workers or employees of other companies—whose departures, in turn, create job openings. When people cease to change jobs, the system grinds to a halt.

Steven Davis, an economist with the University of Chicago, says it isn’t clear what the long-term consequences of reduced churn will be. But in the short run, it makes it harder for the unemployed to find jobs, he says. “For workers who are unemployed, if there’s less churning of jobs, it’s harder to get on the merry-go-round.”

—Ben Casselman

The Wall Street Journal

Is 4% Still Viable?

So, you’ve put the finishing touches on your retirement plan, and you’re set to withdraw 4% from savings each year, because that’s what financial planners (and columnists) have long advised.

Can you guess what’s coming?

Last year, a research paper in the Journal of Financial Planning predicted that a safe nest-egg withdrawal rate for retirements begun in 2010 is 1.8%.

In other words, a new retiree with $500,000 should pull no more than $9,000 from savings annually to help ensure that his money lasts as long as he does.

Stunned? There’s more.

Within weeks of that report’s appearance, a study in Retirement Management Journal made the case that a safe withdrawal rate for some individuals could be as high as 7%. That means the same person with $500,000 could start retirement by pulling about $35,000 from savings annually.

Financial coach Todd R. Tresidder, founder of FinancialMentor.com, offers a four-step method for figuring withdrawal rates that reflects much of the recent research: Estimate your life span, assess market valuations at the time you retire, account for variables like inflation and investment fees, and revisit your plan regularly. Get your adviser to help with this.

And what of Bill Bengen, father of the 4% rule? Mr. Bengen has never claimed that his findings are right for every retiree. Indeed, he thinks some of the latest research is “terrific.”

Still, he notes, 4% remains a prudent jumping-off point for calculating withdrawal rates from nest eggs. Just keep your plan open to some adjustments.

—Glenn Ruffenach

SmartMoney.com

More Than You Think

Let’s get this straight: Medicare pays for very little long-term care, and you’ll still need significant savings to cover the rest of your medical expenses.

But very few retirees have come to terms with that depressing reality. A new survey of 800 middle-income Americans found that 66% of Medicare recipients didn’t know if the program covers long-term care or couldn’t estimate its long-term care coverage.

Despite the fact that the survey was paid for by Bankers Life and Casualty, which sells supplemental Medicare insurance, this sobering finding is still worth thinking about: Two-thirds of those on Medicare also said they pay the same, or more, for health care now than when they were working.

They have been unpleasantly surprised by the cost of Medicare Part B premiums, what you pay for doctor and outpatient coverage, with 44% paying more than they had expected.

—Kelly Greene

Total Return Blog

WSJ.com

The Aggregator, edited by Cristina Lourosa-Ricardo, features news from The Wall Street Journal and other Dow Jones publications. Email: cristina.lourosa@wsj.com

By LAUREN WEBER and LESLIE KWOH

Employers are mixing it up. Jobs, that is.

Some U.S. businesses are giving employees the chance to complete a stint in a different department or temporarily swap places with a colleague overseas.

Companies have long provided job rotations for higher level executives to give them a sense of how different departments operate, but now they are discovering that short- to medium-term moves for rank-and-file employees help workers sharpen their skills, stay motivated and identify new roles they might aim for in the future. Moreover, they help address a challenge that many companies are facing: how to better foster collaboration across different specialties and regions.

“In organizations today there is more emphasis on adaptability, teamwork and learning agility. Companies have to be flexible about creating opportunities for employees to opt into projects,” says Caroline Paxman, president of the Americas for SHL, a talent-measurement firm.

A 2011 survey by the Society for Human Resource Management found that 43% of employers offer cross-training of some kind to help workers develop proficiencies not related to their current jobs.

At Intel Corp., employees can find temporary assignments by searching an internal database with hundreds of listings. These assignments allow workers “to test-drive a job or make connections in different departments,” says Amreen Madhani, who oversees the program which launched last March.

In 11 months, 1,300 positions lasting a few weeks to a year—in areas like HR, finance, strategy, marketing and product development—have been filled. Slots open up around special projects or as staffers take sabbaticals. Employees apply for the positions and take roles pending approval from their current manager and the hiring manger.

Not that such swaps are friction-free. “I felt like a deer in the headlights” says Elizabeth Wright Korytkowski, a 38-year-old benefits specialist who took a four-month assignment with Intel’s software-services group.

Still, the rotation provided Ms. Korytkowski an opportunity to interact directly with employees and gain familiarity with new software and HR tools. Since that assignment, she has received a promotion and completed a second special project outside her usual job duties.

These arrangements are increasingly valuable in retaining a restless work force that is accustomed to fast-paced change and innovation, says John Sullivan, a management professor at San Francisco State University.

At Virgin America, a handful of flight attendants recently traded places with colleagues at Virgin Blue (now Virgin Australia) as part of a one-year exchange. Though the exchange involved only six U.S.-based flight attendants and three from Australia, staff worked for 12 to 18 months, on and off, to get it off the ground.

Was it worth it? “Absolutely,” says Frances Fiorillo, senior vice president of people and in-flight services. “It created a lot of excitement and energy” among the airline’s 450 or so flight attendants, 10% of whom applied to participate, Ms. Fiorillo says.

Virgin America would like to repeat the swap in the future, but for the moment its resources have been tied up in other initiatives, she adds.

All this movement can come at a price for companies since participants learn on a steep curve at first. Often there is lost productivity and resources.

Generally, skills-based rotations are more valuable than swaps that are purely geographic, says Alec Levenson, a research scientist at the University of Southern California’s Center for Effective Organizations. While a program like Virgin’s offers employees some short-term benefits, it may have less impact on a company’s overall effectiveness, he says.

Still, global exchanges can be a valuable retention tool for multinational companies even when they don’t involve a great deal of cross-training.

At PricewaterhouseCoopers LLP, managers nominate six junior staffers who have been at the firm for three to six years to participate in a three-month swap between the U.S. and Australia. The program pairs employees with similar job duties so they can ramp up quickly, says Eliza Scherrer, U.S. global mobility leader for PwC.

Participants profit as they broaden their network and explore a new working environment. The firm profits by getting more work done during the respective busy seasons in Australia (July to September) and the U.S. (January to March).

The program also builds morale and takes employees “out of their comfort zone,” adds Ms. Scherrer.

Terri Lodwick, president of All American Window, a 22-person home-improvement company in Germantown, Wis., says that the long-running job-swap program at her company paid dividends by improving employee retention, customer service and operations. It also helps ease the potential disruptions during maternity and sick leaves.

At the firm, every employee completes 32 to 40 hours of swaps annually, scheduled in four-hour increments. A receptionist might learn to be an order-taker, while installers and service technicians might cross-train. Employees fill out a questionnaire about what they learned and how the program could be improved.

Workers “get to see how they fit into the entire organization, not just their little cubicle,” Ms. Lodwick says.

Write to Lauren Weber at Lauren.Weber@wsj.com and Leslie Kwoh at Leslie.Kwoh@dowjones.com

By TOM FOWLER

The U.S. and Mexico have reached an agreement that would allow oil and gas drilling on more than 1.5 million acres in the Gulf of Mexico, resolving a dispute that has left those areas in limbo for more than a decade.

The agreement signed Monday by U.S. Secretary of State Hillary Clinton and Mexican Foreign Minister Patricia Espinosa in Los Cabos, Mexico, establishes a legal framework for U.S. companies to develop offshore energy projects with Petroleos Mexicanos, the Mexican state oil company known as Pemex, in areas that straddle the two nations’ maritime border. The acreage runs due east from the U.S.-Mexico border to a point more than 200 miles south of the mouth of the Mississippi River, and includes areas where the water is almost 11,000 feet deep.

The agreement also allows U.S. and Mexican safety officials to work together to ensure the projects meet the safety standards of both nations and sets the groundwork for more cooperation to develop uniform safety guidelines for offshore energy development.

The safety agreement is particularly important as Pemex prepares to drill a site near the U.S. maritime border in 9,000 feet of water, nearly twice as deep as the well drilled by the doomed Deepwater Horizon rig in 2010. Officials on both sides of the border have expressed concerns about Pemex’s ability to safely handle such a complex project since it has done relatively few deep-water projects compared with operators in U.S. waters and none as deep as 9,000 feet.

“We’re moving forward with Mexico to make sure we have a common set of safety protocols,” U.S. Secretary of the Interior Ken Salazar said in a conference call.

Mexico, the U.S.’s No. 2 oil supplier behind Canada, has seen its offshore oil production drop for seven straight years and has only about 10 years of proven reserves of crude. The deep-water project is seen as an attempt to reverse that trend.

Houston-based Helix Energy Solutions Group Inc. has discussed providing a system to Pemex to contain a subsea oil leak like the one that occurred following the April 2010 Deepwater Horizon accident off Louisiana, but no firm agreement has yet been reached, according to a spokesman for Helix.

The areas that are part of the agreement may contain as much as 172 million barrels of oil and 304 billion cubic feet of natural gas, according to the U.S. Bureau of Ocean Energy Management.

The bureau included some of the acreage in a lease sale in December, with the understanding nothing would be finalized until the dispute was settled. The area is near successful projects such as Royal Dutch Shell PLC’s Perdido production platform, which is producing about 90,000 barrels of oil equivalent per day.

By STEPHEN MILLER

Art Bartlett wasn’t the first to apply to home sales a franchise model more often associated with selling hamburgers, but he was the most successful.

As co-founder of Century 21 Real Estate Corp., Mr. Bartlett, who died Dec. 31 at age 76, sought to make his company “the McDonald’s of real estate.”

Los Angeles Times

Art Bartlett, who co-founded real-estate company Century 21.

By 1979, when Mr. Bartlett sold his interest in the company, Century 21 had grown to more than 7,000 offices in 50 states and Canada. Today the company’s 120,000 gold-jacketed staff sell homes in 67 countries.

“His concept was imitated by everybody, and it became spectacular,” says Dave Liniger, chairman of RE/Max International Inc., another big real-estate franchisor.

The son of a Glens Falls, N.Y., truck driver, Mr. Bartlett moved to Long Beach, Calif., in the 1940s to care for a sick relative. After working as a salesman for Campbell Soup Co., he took up real estate. He founded his own agency, then formed Comps Inc., an Orange, Calif.-based firm that was one of the earliest to use computers to track comparable home sales.

In 1971, he teamed with a former employee, Marsh Fisher, to form Century 21. Others had tried real-estate sales franchising, including Red Carpet Corp., another California-based company founded in 1966. But Century 21 became franchising on steroids, growing to 2,600 offices within five years of its founding.

Rather than build up a network from scratch, Mr. Bartlett signed up thousands of independent real-estate brokers across the nation in a process that came to be known as “conversion franchising.” To spur growth, he sold regional licenses, and the licensees sold individual franchises. At one point in the mid-1970s, Century 21 was opening over 100 new offices per month.

In exchange for an annual fee and a percentage of sales, Century 21 offered its brokers a range of services from training to purchasing, a referral network, and national advertising, an innovation in residential real estate.

“You can’t overstate the challenge of getting this off the ground,” says Matt Shay, president of the International Franchise Association in Washington. “We’ve lost a true pioneer. He was up there with Ray Kroc of McDonald’s and Kemmons Wilson of Holiday Inn.”

Century 21 went public in 1978, then was acquired by Trans World Corp. in 1979 in a stock and cash deal valued at $89 million. Mr. Bartlett sold his shares and retired, but found retirement uncomfortable.

“When you’re on a fast track of building a company you can’t just turn it off and slow down,” Mr. Bartlett told a reporter in 1982. He tried to apply his franchising expertise at Mr. Build, a home-remodeling chain he hoped to take national. But Mr. Build stalled, and Mr. Bartlett turned to real-estate investments.

Mr. Bartlett lived in an exclusive section of Orange County, then built what his family calls his “dream home” overlooking San Diego Bay. He collected classic cars, from Packards and Fords of the 1930s to Corvettes and Thunderbirds of the 1950s.

Write to Stephen Miller at stephen.miller@wsj.com

Printed in The Wall Street Journal, page A4