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3/22/2006
Ten MUSTS For a Successful Speech
Stephan Schiffman
New York, NY (March 14th): Fear of public speaking ranks high on nearly every study of common anxieties -- higher even than the fear of death!
As someone who has delivered hundreds of speeches before groups of all kinds, and trained many people to do the same, I have some insights on this. What people really fear is not so much public speaking itself as the possibility of being unprepared for a speech.
If you prepare well, you will eliminate most of the fear. Here are the ten “MUSTS” for a successful speech. Cover all ten, and you will be well prepared for the big event.
1. You MUST use humor to establish rapport with the audience very early on in the speech -- and preferably self-deprecating humor. (Abraham Lincoln was once accused of being two-faced. Lincoln replied, “If I had two faces, do you think this is the one I’d be wearing?” )
2. You MUST know your audience and match your content to their world.
3. You MUST know your material thoroughly. In other words, you must practice delivering the major points, in the order you want to cover them, preferably in front of people such as family or friends. (Doing this ahead of time will also help you identify what should be eliminated from the speech.) Consider making an audio or video of your speech and reviewing it closely before you deliver it to a “live” group.
4. You MUST know your own strengths and weaknesses as a speaker. Make sure you are emphasizing your strengths during the speech.
5. You MUST wear appropriate attire for the occasion.
6. You MUST project comfort and confidence to the audience. Erect posture and the ability to take deep breaths is a part of this. Do not confuse “confidence” with “arrogance”—being able to admit that you do not know something, or that you made an error about something, will usually win you attention and interest.
7. You MUST use appropriate body language – hand gestures, walking, spreading your arms – to retain visual interest from the audience.
8. You MUST speak comprehensibly. If this is a problem according to other people who listen to you practice delivering your speech, make a conscious choice to slow down and enunciate. Find ways to remind yourself of this during the speech.
9. You MUST speak loudly enough to be heard by everyone. (If you don’t have a microphone, pitch your voice so that the person in the back of the room will hear what you’re saying.)
10. You MUST speak with enthusiasm and conviction. If the audience does not believe that you believe what you’re saying, they will tune out.
STEPHAN SCHIFFMAN is the president of D.E.I., one of the largest sales training companies in the U.S. He is the author of a number of best-selling books including Cold Calling Techniques (That Really Work!), and The 25 Sales Habits of Highly Effective Salespeople, and Stephan Schiffman’s Telesales. Schiffman’s writings have appeared in many publications including The Wall Street Journal, The New York Times and INC. magazine. He has appeared as a guest on CNBC’s “Minding Your Business,” “How to Succeed in Business,” and “Smart Money,” among many other programs. Mr. Schiffman holds degrees from Ithaca College and Cornell, and has taught at New York University, Marymount Collge, and Adelphi University. He is a past president of the New York City Chamber of Commerce.
miércoles, 31 de octubre de 2007
¿Busca una renta mensual?
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Fidelity recently introduced a new kind of mutual fund called an income replacement fund. This kind of fund is managed with the goal in mind of maximizing income by balancing growth investing, income investing, and a return of principal.
They give an example in this video of a woman who wants to invest $100,000 for 20 years. Her average monthly income from her $100,000 investment is $540. Here’s a look at her projected monthly income based on the year:
It’s important to note that these monthly income payments ARE NOT guaranteed. That said, the funds are designed based on the time horizon. In other words, as time progresses, the funds become more conservative. These funds carry an expense ratio around .61%, which isn’t too bad especially when you consider the expenses on most annuities that are designed to do essentially the same thing but with some guarantees.
I think this is an interesting concept that is only going to get more popular. In fact, I read last week in the Wall Street Journal that Vanguard is planning their own versions of income replacement funds called “Managed Payout Funds.” From the article:
Vanguard filed with the Securities and Exchange Commission last week to launch Managed Payout Real Growth, Managed Payout Moderate Growth and Managed Payout Capital Preservation.
Vanguard’s expense ratio on these funds is expected to be around .34% or roughly half of what Fidelity charges.
This is only the beginning…
Fidelity recently introduced a new kind of mutual fund called an income replacement fund. This kind of fund is managed with the goal in mind of maximizing income by balancing growth investing, income investing, and a return of principal.
They give an example in this video of a woman who wants to invest $100,000 for 20 years. Her average monthly income from her $100,000 investment is $540. Here’s a look at her projected monthly income based on the year:
It’s important to note that these monthly income payments ARE NOT guaranteed. That said, the funds are designed based on the time horizon. In other words, as time progresses, the funds become more conservative. These funds carry an expense ratio around .61%, which isn’t too bad especially when you consider the expenses on most annuities that are designed to do essentially the same thing but with some guarantees.
I think this is an interesting concept that is only going to get more popular. In fact, I read last week in the Wall Street Journal that Vanguard is planning their own versions of income replacement funds called “Managed Payout Funds.” From the article:
Vanguard filed with the Securities and Exchange Commission last week to launch Managed Payout Real Growth, Managed Payout Moderate Growth and Managed Payout Capital Preservation.
Vanguard’s expense ratio on these funds is expected to be around .34% or roughly half of what Fidelity charges.
This is only the beginning…
martes, 30 de octubre de 2007
Plata
Staying High and Dry in a Recession
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by Robert Kiyosaki
Posted on Monday, October 29, 2007, 12:00AM
There's an old saying that goes, "It's a recession if your neighbor loses his job. It's a depression if you lose your job."
Watching the financial news networks and reading the financial publications these days, you'll see many people asking if the U.S. economy is heading into a recession. From my vantage point, the answer is yes. I believe that for many people in certain industries, like real estate, the worst is yet to come.
Economic Ripple Effects
Before getting into why I think there will be a recession, it's important to know the specific definition of the term. Very simply, a recession is a decline in a country's gross domestic product (GDP) for at least two quarters. That means that by Christmas we'll know if we're in a recession or not.
In some ways, the coming recession is a product of the physical phenomenon known as precession. Precession is the effect of bodies in motion upon other bodies in motion -- or, more simply, a ripple effect, like when you throw a stone into a still pond and the waves emanating from it overlap.
While there are many such processional "waves" in the coming recession, one is the lack of integrity in the U.S. monetary system. The United States has defaulted on its financial promises many times in recent history. In 1934, we defaulted on domestic gold redemption. That year, it became illegal for U.S. citizens to own gold. Instead, the government required Americans to turn in their gold, and they were paid $20 in paper money for every ounce of gold they surrendered.
Once the gold was collected, the government raised the price of gold to $35 an ounce. Talk about a lack of integrity. And in 1968, the U.S. defaulted on silver redemption, taking U.S. dollars backed by silver out of circulation. Finally, in 1971, the U.S. defaulted on international gold redemption.
International Impact
Another reason for the coming recession is the subprime mess. And while issues related to the subprime fiasco may seem domestic, they actually have severe international consequences. The subprime mess seems to be a problem associated with lower-income people who can't afford their homes, yet it's really the tip of a very large international iceberg, and it'll affect all of us. Here's why.
In the Sept. 12, 2007, issue of Business Week, Kerry Capell asked the question, "Could any country be more exposed to the credit crunch than the U.S.?" The answer: "You bet, and that place is Britain."
Unlike many of its European neighbors, Britain shares many of America's financial traits. In the last few years, access to cheap credit in Britain has fueled a decade of economic growth, with home prices tripling in 10 years -- an even faster rise than in the United States. With cheap borrowed money, the English consumer has caused the British economy to boom; consumers are responsible for two-thirds of the British economy.
Today, Britain is more dependent upon financial services than we are. So what will happen to the world if both England and the United States go into a recession? The precessional effect is bound to be dire -- especially for working people.
Too Much Money
As strange as it may seem to the average person, the problem is not a shortage of money -- it's too much money. The world is choking on too many U.S. dollars.
Normally, when a currency gets into trouble as the dollar is now, all the country has to do is raise the interest rates on their bonds and things are fine again. But because of the subprime meltdown, the Federal Reserve can't simply raise or lower interest rates.
In simplified terms, the Fed must keep rates low in order to save the domestic economy. This causes the international economy to dump the dollar by not buying our bonds, which is one reason why the price of gold keeps going up -- it's the true international money. And the rise in its price (and in the price of oil) signals the loss of the purchasing power of the dollar; the world simply doesn't want any more dollars. This is a ripple effect from 1971, when the dollar came off the gold standard.
Less for More
The tragedy of this excess of money is that most of the world's workers have to work harder to earn less. This is because the currencies of the world are becoming less and less valuable. Even if workers get pay raises, the boost won't be able to keep pace with declines in the purchasing power of money, increases in expenses such as oil, decreases in the value of homes, declines in the value of stocks, and increases in taxes.
Just look at what's happened in the last decade. Ten years ago, gold was about $275 an ounce. Today, it's over $700. That means that, compared to gold, your income would've had to go up by 250 percent just to keep up with the loss in purchasing power of the dollar. Or, compared to oil -- which was about $10 a barrel 10 years ago and today is over $80 a barrel -- your income would've had to go up by 800 percent.
Sure, there are many people whose incomes have gone up way beyond 800 percent in the last 10 years. The problem is that most people's incomes haven't kept pace, and they're technically in a state of personal recession with no way out.
Throw Yourself a Lifeline
As the global economy continues to gyrate, you'll hear more and more people calling for the Federal Reserve to either lower or raise interest rates. The problem is that the Fed has less and less power to do much.
If it tries to save the domestic economy, the international economy will pound us. If the Fed tries to save the dollar internationally by raising interest rates, it'll kill the domestic economy.
Instead of looking to the Fed to save you, then, I recommend you save yourself by investing in real international money. One way to do so is by purchasing silver. Gold is expensive, but silver is still a bargain even for the little guy. When the recession comes, the ripple effect on your financial future will be immeasurable.
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by Robert Kiyosaki
Posted on Monday, October 29, 2007, 12:00AM
There's an old saying that goes, "It's a recession if your neighbor loses his job. It's a depression if you lose your job."
Watching the financial news networks and reading the financial publications these days, you'll see many people asking if the U.S. economy is heading into a recession. From my vantage point, the answer is yes. I believe that for many people in certain industries, like real estate, the worst is yet to come.
Economic Ripple Effects
Before getting into why I think there will be a recession, it's important to know the specific definition of the term. Very simply, a recession is a decline in a country's gross domestic product (GDP) for at least two quarters. That means that by Christmas we'll know if we're in a recession or not.
In some ways, the coming recession is a product of the physical phenomenon known as precession. Precession is the effect of bodies in motion upon other bodies in motion -- or, more simply, a ripple effect, like when you throw a stone into a still pond and the waves emanating from it overlap.
While there are many such processional "waves" in the coming recession, one is the lack of integrity in the U.S. monetary system. The United States has defaulted on its financial promises many times in recent history. In 1934, we defaulted on domestic gold redemption. That year, it became illegal for U.S. citizens to own gold. Instead, the government required Americans to turn in their gold, and they were paid $20 in paper money for every ounce of gold they surrendered.
Once the gold was collected, the government raised the price of gold to $35 an ounce. Talk about a lack of integrity. And in 1968, the U.S. defaulted on silver redemption, taking U.S. dollars backed by silver out of circulation. Finally, in 1971, the U.S. defaulted on international gold redemption.
International Impact
Another reason for the coming recession is the subprime mess. And while issues related to the subprime fiasco may seem domestic, they actually have severe international consequences. The subprime mess seems to be a problem associated with lower-income people who can't afford their homes, yet it's really the tip of a very large international iceberg, and it'll affect all of us. Here's why.
In the Sept. 12, 2007, issue of Business Week, Kerry Capell asked the question, "Could any country be more exposed to the credit crunch than the U.S.?" The answer: "You bet, and that place is Britain."
Unlike many of its European neighbors, Britain shares many of America's financial traits. In the last few years, access to cheap credit in Britain has fueled a decade of economic growth, with home prices tripling in 10 years -- an even faster rise than in the United States. With cheap borrowed money, the English consumer has caused the British economy to boom; consumers are responsible for two-thirds of the British economy.
Today, Britain is more dependent upon financial services than we are. So what will happen to the world if both England and the United States go into a recession? The precessional effect is bound to be dire -- especially for working people.
Too Much Money
As strange as it may seem to the average person, the problem is not a shortage of money -- it's too much money. The world is choking on too many U.S. dollars.
Normally, when a currency gets into trouble as the dollar is now, all the country has to do is raise the interest rates on their bonds and things are fine again. But because of the subprime meltdown, the Federal Reserve can't simply raise or lower interest rates.
In simplified terms, the Fed must keep rates low in order to save the domestic economy. This causes the international economy to dump the dollar by not buying our bonds, which is one reason why the price of gold keeps going up -- it's the true international money. And the rise in its price (and in the price of oil) signals the loss of the purchasing power of the dollar; the world simply doesn't want any more dollars. This is a ripple effect from 1971, when the dollar came off the gold standard.
Less for More
The tragedy of this excess of money is that most of the world's workers have to work harder to earn less. This is because the currencies of the world are becoming less and less valuable. Even if workers get pay raises, the boost won't be able to keep pace with declines in the purchasing power of money, increases in expenses such as oil, decreases in the value of homes, declines in the value of stocks, and increases in taxes.
Just look at what's happened in the last decade. Ten years ago, gold was about $275 an ounce. Today, it's over $700. That means that, compared to gold, your income would've had to go up by 250 percent just to keep up with the loss in purchasing power of the dollar. Or, compared to oil -- which was about $10 a barrel 10 years ago and today is over $80 a barrel -- your income would've had to go up by 800 percent.
Sure, there are many people whose incomes have gone up way beyond 800 percent in the last 10 years. The problem is that most people's incomes haven't kept pace, and they're technically in a state of personal recession with no way out.
Throw Yourself a Lifeline
As the global economy continues to gyrate, you'll hear more and more people calling for the Federal Reserve to either lower or raise interest rates. The problem is that the Fed has less and less power to do much.
If it tries to save the domestic economy, the international economy will pound us. If the Fed tries to save the dollar internationally by raising interest rates, it'll kill the domestic economy.
Instead of looking to the Fed to save you, then, I recommend you save yourself by investing in real international money. One way to do so is by purchasing silver. Gold is expensive, but silver is still a bargain even for the little guy. When the recession comes, the ripple effect on your financial future will be immeasurable.
jueves, 25 de octubre de 2007
Dollar-cost averaging
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In turbulent times, resist the urge to mess with your retirement plan and you'll come out ahead.
With dreary news coming out of the banking and real estate scenes almost daily, and the dreaded "r" word (as in recession) getting tossed around, roller-coaster madness is the new normal in the stock market.
It's a scary situation. But it doesn't have to wreck your retirement.
The single most important thing you can do in a turbulent market is stick to your retirement game plan - that means contributing regularly and definitely not panicking and selling.
In fact, if you had stayed the course when the stock market was tanking in July and August, you actually would have made a far better return on your money than if the stock market had stayed flat - or even increased modestly.
The reason comes down to dollar-cost averaging. Let's say, for example, that you contribute $500 from your paycheck every two weeks to your retirement plan. Of that amount, let's further assume that you are allocating 80%, or $400, to a low-cost stock fund, such as Vanguard's S&P 500 index fund.
Looking back at the third quarter, you would have made seven contributions (assuming you get paid every other Thursday). Each $400 allocation to the index fund would have purchased a different number of shares. (see table)
On July 19, for instance, when the fund was trading at $143 per share, you would have bought 2.8 shares. On Aug. 16, when the price had tanked to $130, you would have picked up 3.1 shares. All told, by the end of the quarter you would have purchased 20.46 shares for a total cost of $2,800.
How did the market overall do during that time? By the end of September, it had just barely recovered from the 10% plunge it took in July and August, when the credit crisis was in full swing. As a result, the Vanguard S&P 500 index fund managed to eke out a gain of just 0.8% for the third quarter.
But you would have done much, much better. On Sept. 27, the 20.46 shares you purchased were worth $141 each, for a total of $2,885. That translates into a 3% gain on your retirement plan contributions for the third quarter - a return that most professional money managers would have killed for.
And you would have gotten it because you had the courage to keep buying as the market fell.
By the way, you would have gotten the same type of great returns if you had been buying stocks right after the Crash of 1987 - or after any other big drop. As long as your investing timeframe is long enough to allow the market to climb back from a potentially severe plunge - about 7-10 years - then you will usually be far better off contributing to your retirement plan.
That's not to suggest that dollar-cost averaging alone is a panacea for anything that might ail your retirement plan. If we get another prolonged bear market and you don't have a lot of time on your side (if you're planning to retire in 5 years' time, for instance), your stock investments are going to take a hit no matter what.
So to be truly shock-resistant, your retirement plan must hold a diversified mix of stocks and bonds. And you have to rebalance every year. I'll get into those issues in future columns.
In the meantime, just remember that if you have a decent time horizon and you're diversified, your best bet in a volatile market is to simply let your retirement plan do its thing. Resist the urge to mess with it. You won't regret it.
Questions or comments about retirement? Send e-mails to jrevell@moneymail.com.
Copyrighted, CNNMoney. All Rights Reserved.
martes, 23 de octubre de 2007
Primas de Seguros de Gastos Médicos
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2007-09-24
Companies Focusing on Health Plan Designs and Keeping Employees Healthy to Help Mitigate Impact of Rate Increases
LINCOLNSHIRE, Ill. – U.S. companies enjoyed a nine-year low in health care cost rate increases this year, but employers and employees should not expect to see that trend continue in 2008, according to Hewitt Associates, a global human resources services company. In 2007, average health care rate increases were 5.3 percent, down from 7.9 percent in 2006. However, Hewitt is projecting an 8.7 percent average increase for employers in 2008.
Outlook for 2008
According to Hewitt, the average health cost per person for major companies will increase from $7,982 in 2007 to $8,676 in 2008. The amount employees are being asked to contribute in 2008 will be $1,859, representing approximately 21 percent of the overall health care premium and up from $1,690 in 2007. Average employee out-of-pocket costs, such as copayments, coinsurance and deductibles, are also expected to increase from $1,576 in 2007 to $1,738 in 2008. Overall, employees' total health care costs — including employee contribution and out-of-pocket costs — are projected to be $3,597 in 2008, up 10.1 percent from $3,266 in 2007.
"It's encouraging to see rate increases soften because it means that companies are making a concerted effort to manage health care costs," said Jim Winkler, practice leader of Hewitt's Health Management Consulting business. "However, one of the primary ways employers have been accomplishing this is by passing a significant percentage of costs to employees, and we're seeing evidence that this strategy is prompting an increasing number of employees to forego necessary preventative care and/or not comply with prescribed medications. While some cost shifting is appropriate, it's critical that companies design their health care programs in a way that encourages employees to use them — and use them wisely. Otherwise, they are essentially trading preventative care now for 'rescue care' later, which will lead to unhealthy employee populations, a decrease in employee productivity and ultimately — higher health care costs."
2007 Cost Increases by Major Metropolitan Area
While Hewitt's data shows a decline in overall cost increases in 2007, a few major U.S. markets experienced rate increases two-to-three times higher than the average: Nashville (14.1 percent), San Diego (11.5 percent) and San Francisco (11.5 percent).
"It's hard to pinpoint the exact reasons why health care cost increases vary in each region, but differences in health plan competition, demographics and market dynamics of health care providers are all factors," said Bob Tate, chief actuary of Hewitt's Health Management Consulting business. "We've noticed that several of the cities with the highest rate increases this year have a large number of employees enrolled in HMO plans, and these plans have experienced higher cost increases in recent years."
2007 Cost Increases by Plan Type
On average, Hewitt saw average cost increases in 2007 of 9.1 percent for traditional indemnity plans, 8.7 percent for health maintenance organizations (HMOs), 3.9 percent for point-of-service (POS) plans and 2.4 percent for preferred provider organizations (PPOs).
For 2008, Hewitt forecasts that companies will receive cost increases of 9.0 percent for traditional indemnity plans, 8.5 percent for POS plans, 9.0 percent for HMOs, and 8.5 percent for PPOs. That means from 2007 to 2008, the average cost per person for major companies will increase from $7,957 to $8,673 for HMOs; $7,790 to $8,452 for PPOs; $8,573 to $9,302 for POS plans; and $9,277 to $10,112 for indemnity plans.
"We believe the 2007 rates of increase for POS and PPO plans represent somewhat of a 'market correction' from prior-year, conservative pricing assumptions, especially for self-insured plans," said Tate. "Actual experience has been trending favorably relative to employer forecasts, resulting in less of a need for an increase for 2007."
Employer Response to Rate Increases
While rate increases remain moderate, employers continue to take proactive steps to mitigate costs and enable employees to make smarter and more effective health care decisions, including:
Adopting best practices and creating more stringent requirements around vendor selection. As employers adopt leading-edge strategies to impact the health of their workforce, they are increasingly contracting with an array of vendor partners, each focused on specific elements of the health care program. "Choosing best-in-class vendors can help make programs more cost-effective as long as the employer has built in an appropriate degree of cross-program accountability for the vendors," noted Winkler.
Pinpointing the drivers of costs. More companies are taking a closer look at the health risks and needs of their employee population and offering more focused programs and solutions targeted to employees who incur the majority of health care costs. According to recent Hewitt research, more than three-quarters (77 percent) of responding companies profiled the chronic health conditions prevalent in their workforce in 2007, compared with just 43 percent in 2006. In addition, between 65 percent and 79 percent of companies gave employees — or planned to give them in 2007 — access to targeted condition management or wellness programs through health plans or focused programs.
"By obtaining insight into the health risks and chronic conditions of at-risk populations in their workforce, employers can identify portions of the employee population that are currently — or likely to become — the most costly and make changes to their plan designs that will drive employees to make better, more consistent decisions about their health," said Winkler. "These types of programs not only influence healthy employee behaviors through integrated health management, but they provide companies with significant opportunities for short- and long-term cost savings."
Offering new health plans. Account-based plan designs are gaining traction by employers as a way to control costs. Hewitt's research found that more than 20 percent of companies offer, or plan to offer, a high-deductible health plan with a health savings account (HSA) by the end of this year and almost half are considering offering one at a future date. While just 3 percent of employees elected these plans last year, most companies anticipate that enrollment will grow to 20 percent in five years.
In addition, as fully insured HMO rates increase in excess of overall medical cost increases, an increasing number of companies are eliminating local HMO offerings and are now offering HMOs under a self-insured arrangement. This enables companies to offer more consistent plan designs and health care programs across their entire employee population, reducing administrative costs and simplifying communication messages to employees during annual enrollment.
Encouraging use of health care via "value-based" plan design changes. While still an emerging concept, more companies are beginning to incorporate value-based design changes into their health care programs. These types of plans remove the unnecessary barriers to care that employees face by providing them with incentives to use appropriate care/services to manage their health.
According to recent Hewitt research, almost one in five (19 percent) large companies has implemented a value-based plan design, and another 40 percent are interested in learning more about them. Hewitt recently introduced a Value-Based Design Model that enables companies, in real time, to analyze the compliance effects and financial impact of reducing employee cost sharing for specific health care services and increasing employee cost sharing for others. Using companies' existing prescription drug utilization and cost data, the tool also helps them understand how to make these clinically desirable plan design changes without increasing overall health care costs.
Changing prescription drug coverage. Companies are focusing more on generic and value drug programs, aggressive Pharmacy Benefit Manager (PBM) contracting and coinsurance in their drug plans to continue to influence utilization and costs. They are also taking more interest in measuring employee compliance with prescription drug usage so that they can make changes to their plans – including adding incentives – in order to encourage employees to take medications for which they were prescribed.
About Hewitt's Data
Hewitt's health care cost data is derived from the Hewitt Health Value Initiative, a cost and performance analysis database of more than 1,800 health plans throughout the U.S., including 400 major employers and more than 18 million health plan participants.
About Hewitt Associates
With more than 65 years of experience, Hewitt Associates (NYSE: HEW) is the world's foremost provider of human resources outsourcing and consulting services. The company consults with more than 2,300 organizations and administers human resources, health care, payroll and retirement programs on behalf of more than 340 companies to millions of employees and retirees worldwide. Located in 35 countries, Hewitt employs approximately 24,000 associates. For more information, please visit www.hewitt.com.
2007-09-24
Companies Focusing on Health Plan Designs and Keeping Employees Healthy to Help Mitigate Impact of Rate Increases
LINCOLNSHIRE, Ill. – U.S. companies enjoyed a nine-year low in health care cost rate increases this year, but employers and employees should not expect to see that trend continue in 2008, according to Hewitt Associates, a global human resources services company. In 2007, average health care rate increases were 5.3 percent, down from 7.9 percent in 2006. However, Hewitt is projecting an 8.7 percent average increase for employers in 2008.
Outlook for 2008
According to Hewitt, the average health cost per person for major companies will increase from $7,982 in 2007 to $8,676 in 2008. The amount employees are being asked to contribute in 2008 will be $1,859, representing approximately 21 percent of the overall health care premium and up from $1,690 in 2007. Average employee out-of-pocket costs, such as copayments, coinsurance and deductibles, are also expected to increase from $1,576 in 2007 to $1,738 in 2008. Overall, employees' total health care costs — including employee contribution and out-of-pocket costs — are projected to be $3,597 in 2008, up 10.1 percent from $3,266 in 2007.
"It's encouraging to see rate increases soften because it means that companies are making a concerted effort to manage health care costs," said Jim Winkler, practice leader of Hewitt's Health Management Consulting business. "However, one of the primary ways employers have been accomplishing this is by passing a significant percentage of costs to employees, and we're seeing evidence that this strategy is prompting an increasing number of employees to forego necessary preventative care and/or not comply with prescribed medications. While some cost shifting is appropriate, it's critical that companies design their health care programs in a way that encourages employees to use them — and use them wisely. Otherwise, they are essentially trading preventative care now for 'rescue care' later, which will lead to unhealthy employee populations, a decrease in employee productivity and ultimately — higher health care costs."
2007 Cost Increases by Major Metropolitan Area
While Hewitt's data shows a decline in overall cost increases in 2007, a few major U.S. markets experienced rate increases two-to-three times higher than the average: Nashville (14.1 percent), San Diego (11.5 percent) and San Francisco (11.5 percent).
"It's hard to pinpoint the exact reasons why health care cost increases vary in each region, but differences in health plan competition, demographics and market dynamics of health care providers are all factors," said Bob Tate, chief actuary of Hewitt's Health Management Consulting business. "We've noticed that several of the cities with the highest rate increases this year have a large number of employees enrolled in HMO plans, and these plans have experienced higher cost increases in recent years."
2007 Cost Increases by Plan Type
On average, Hewitt saw average cost increases in 2007 of 9.1 percent for traditional indemnity plans, 8.7 percent for health maintenance organizations (HMOs), 3.9 percent for point-of-service (POS) plans and 2.4 percent for preferred provider organizations (PPOs).
For 2008, Hewitt forecasts that companies will receive cost increases of 9.0 percent for traditional indemnity plans, 8.5 percent for POS plans, 9.0 percent for HMOs, and 8.5 percent for PPOs. That means from 2007 to 2008, the average cost per person for major companies will increase from $7,957 to $8,673 for HMOs; $7,790 to $8,452 for PPOs; $8,573 to $9,302 for POS plans; and $9,277 to $10,112 for indemnity plans.
"We believe the 2007 rates of increase for POS and PPO plans represent somewhat of a 'market correction' from prior-year, conservative pricing assumptions, especially for self-insured plans," said Tate. "Actual experience has been trending favorably relative to employer forecasts, resulting in less of a need for an increase for 2007."
Employer Response to Rate Increases
While rate increases remain moderate, employers continue to take proactive steps to mitigate costs and enable employees to make smarter and more effective health care decisions, including:
Adopting best practices and creating more stringent requirements around vendor selection. As employers adopt leading-edge strategies to impact the health of their workforce, they are increasingly contracting with an array of vendor partners, each focused on specific elements of the health care program. "Choosing best-in-class vendors can help make programs more cost-effective as long as the employer has built in an appropriate degree of cross-program accountability for the vendors," noted Winkler.
Pinpointing the drivers of costs. More companies are taking a closer look at the health risks and needs of their employee population and offering more focused programs and solutions targeted to employees who incur the majority of health care costs. According to recent Hewitt research, more than three-quarters (77 percent) of responding companies profiled the chronic health conditions prevalent in their workforce in 2007, compared with just 43 percent in 2006. In addition, between 65 percent and 79 percent of companies gave employees — or planned to give them in 2007 — access to targeted condition management or wellness programs through health plans or focused programs.
"By obtaining insight into the health risks and chronic conditions of at-risk populations in their workforce, employers can identify portions of the employee population that are currently — or likely to become — the most costly and make changes to their plan designs that will drive employees to make better, more consistent decisions about their health," said Winkler. "These types of programs not only influence healthy employee behaviors through integrated health management, but they provide companies with significant opportunities for short- and long-term cost savings."
Offering new health plans. Account-based plan designs are gaining traction by employers as a way to control costs. Hewitt's research found that more than 20 percent of companies offer, or plan to offer, a high-deductible health plan with a health savings account (HSA) by the end of this year and almost half are considering offering one at a future date. While just 3 percent of employees elected these plans last year, most companies anticipate that enrollment will grow to 20 percent in five years.
In addition, as fully insured HMO rates increase in excess of overall medical cost increases, an increasing number of companies are eliminating local HMO offerings and are now offering HMOs under a self-insured arrangement. This enables companies to offer more consistent plan designs and health care programs across their entire employee population, reducing administrative costs and simplifying communication messages to employees during annual enrollment.
Encouraging use of health care via "value-based" plan design changes. While still an emerging concept, more companies are beginning to incorporate value-based design changes into their health care programs. These types of plans remove the unnecessary barriers to care that employees face by providing them with incentives to use appropriate care/services to manage their health.
According to recent Hewitt research, almost one in five (19 percent) large companies has implemented a value-based plan design, and another 40 percent are interested in learning more about them. Hewitt recently introduced a Value-Based Design Model that enables companies, in real time, to analyze the compliance effects and financial impact of reducing employee cost sharing for specific health care services and increasing employee cost sharing for others. Using companies' existing prescription drug utilization and cost data, the tool also helps them understand how to make these clinically desirable plan design changes without increasing overall health care costs.
Changing prescription drug coverage. Companies are focusing more on generic and value drug programs, aggressive Pharmacy Benefit Manager (PBM) contracting and coinsurance in their drug plans to continue to influence utilization and costs. They are also taking more interest in measuring employee compliance with prescription drug usage so that they can make changes to their plans – including adding incentives – in order to encourage employees to take medications for which they were prescribed.
About Hewitt's Data
Hewitt's health care cost data is derived from the Hewitt Health Value Initiative, a cost and performance analysis database of more than 1,800 health plans throughout the U.S., including 400 major employers and more than 18 million health plan participants.
About Hewitt Associates
With more than 65 years of experience, Hewitt Associates (NYSE: HEW) is the world's foremost provider of human resources outsourcing and consulting services. The company consults with more than 2,300 organizations and administers human resources, health care, payroll and retirement programs on behalf of more than 340 companies to millions of employees and retirees worldwide. Located in 35 countries, Hewitt employs approximately 24,000 associates. For more information, please visit www.hewitt.com.
lunes, 22 de octubre de 2007
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New ETFs Target Retirement Market
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by John Spence
Monday, October 22, 2007provided byMarketWatch
First 'lifecycle' ETFs aimed at long-term investors in retirement plans.
The first target-date exchange-traded funds might just lift the velvet rope that has kept ETFs from the biggest party of all: retirement plans.
ETFs listed on U.S. exchanges have grown to more than $500 billion in assets, but they've been unable to make significant inroads into the retirement-plan market, long seen as a cash cow for traditional mutual funds.
At the end of 2006, retirement plans
assets grew to about $2.7 trillion, according to Investment Company Institute, the main trade group for the mutual fund industry. About 50 million American workers participated in retirement plans
at year-end.
Mutual funds have enjoyed a tremendous boost from the rise of the retirement plans because, along with other products such as annuities, they account for most retirement investment options.
ETFs, meanwhile, face several barriers to entry. ETFs are structured as baskets of securities that trade like individual stocks, and broker commissions are required to buy and sell shares. Many wonder if the ability to trade frequently is relevant for long-term investors in retirement plans.
Some firms are working on platforms that would aggregate ETF trades to reduce trading fees. However, the administration and record-keeping of retirement plans is geared to mutual funds.
Tracking the life cycle
In a bid to crack the retirement plans nut, TD Ameritrade Holding Corp. (AMTD) subsidiary Amerivest Investment Management LLC and XShares Advisors have partnered to create a family of the first "lifecycle" ETFs.
Also known as target-date funds, these offerings have been extremely popular choices in retirement plans when offered as mutual funds. The investment products are designed to provide investors with diversified exposure to bonds, U.S. stocks, foreign companies and other asset classes.
Target-date funds are classified by the year in which the worker plans to retire or reach some other major financial goal. These products are designed to automatically scale back risk as the investor gets closer to the target date, typically by selling stocks and buying income-producing bonds.
So-called balanced funds, which include lifecyle offerings and invest in both stocks and bonds, are increasingly popular with younger workers in retirement plans.
"More recently hired participants hold balanced funds and are more likely to hold a high concentration of their accounts in balanced funds," wrote the ICI in its latest review of the retirement plans market.
"In addition, at year-end 2006, 24% of the account balances of recently hired participants in their twenties is invested in balanced funds, compared with 19% in 2005, and about 7% among that age group in 1998," the group said. "A similar pattern occurs across all age groups."
Apart from target-date funds, the ETF business has been trying to break into the retirement-plan market for years. There are already "funds of funds" and separate accounts that use ETFs for the underlying investments.
Additionally, BenefitStreet Inc. and money manager Barclays Global Investors earlier this year struck a deal to distribute ETFs to corporate sponsors.
BenefitStreet, which handles record-keeping and many client-support functions, last month launched a new retirement plans platform enabling investors to choose both ETFs and mutual funds in the same plan.
WisdomTree Investments Inc. (WSDT) recently unveiled a retirement plans platform designed for retirement plans, while Invest n Retire LLC in Portland, Ore., is a back-office specialists offering ETFs directly to employers.
Long-term horizon
TD Ameritrade and XShares have launched five new target-date ETFs: TDAX Independence 2010 ETF (TDD), TDAX Independence 2020 ETF (TDH), TDAX Independence 2030 ETF (TDN) and TDAX Independence 2040 ETF (TDV) and TDAX In-Target ETF (TDX).
The lifecycle funds get progressively more aggressive the further out the target date. For example, TDAX Independence 2010 ETF has an initial allocation to 8% in international stocks, 25% in U.S. stocks and 67% in fixed-income, although the allocations change over time.
However, the TDAX Independence 2040 ETF has an initial 24% stake in international, 73% in domestic stocks and 3% in bonds. The TDAX In-Target ETF is the most conservative, with 89% earmarked for fixed-income.
Bill Vulpis, president of Amerivest, said the new TDAX Independence ETFs are unique because they're not structured as funds of funds like most target-date offerings. Rather, they invest in proprietary indexes designed by Zacks Investment Research. He touted the low costs, transparency and flexibility of ETFs as a natural fit. The target-date ETFs have expense ratios of 0.65%, compared with about 1.3% for the average comparable mutual fund, Vulpis said.
Each of the new TDAX Independence ETFs tracks a Zacks index holding 500 securities -- 300 U.S. stocks, 100 international developed-markets equities and 100 debt securities.
"We wanted to provide a product that was simple yet diversified, with modest fees," Vulpis said. "We want to help investors with automatic asset allocation and rebalancing, and an ETF was the best way to go about that."
Michael Case Smith, managing director at Zacks IFE, added that the indexes result in lifecycle ETFs that are more aggressive in the "out" years when the target date is distant, by allocating relatively more to stocks than bonds, relative to comparable funds. Meanwhile, the Zacks indexes get relatively more conservative when they get close to the target date, Smith said.
The indexes are more aggressive in the "out" years because people have many more working years ahead, he explained. The benchmarks are more conservative closer to the target date because investors then are concerned with preserving capital, he added.
Pension reform alters landscape
Assets in target-date funds are expected to grow with the passage of the Pension Protection Act. Although the Labor Department is still finalizing its rules, many companies have been automatically enrolling employees in retirement plans. More importantly, target-date funds are seen as logical "default" options if the workers don't choose their investments.
Congress is also considering mandating greater fee disclosure in retirement plans, and the Labor Department is working on improving disclosure between plans and workers.
Tony Dudzinski, chief executive at XShares Advisors, said the indexed ETF structure offers advantages in that regard. He said managers may face conflicts of interest because most target-date funds own in-house funds that may be expensive or have poor performance. The fund of funds structure also layers on extra management fees on top of the expenses for the underlying funds, he said.
Also, ETFs can bring more transparency to the target-date fund market because the holdings are disclosed daily, Dudzinski said.
"Based on what the Labor Department is doing, we see big changes for the retirement plans and defined-contribution markets," the executive said, adding he expects more disclosure on fees that mutual funds pay to retirement plans.
XShares' move into diversified target-date funds is somewhat surprising because the firm is best known for its ETFs that break the health-care industry into narrow slices.
Dudzinski said the company is building multiple business lines and a wider spectrum of products. Last month, XShares listed a family of specialized real estate ETFs with Adelante Shares LLC.
John Spence is a reporter for MarketWatch in Boston.
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lunes, 8 de octubre de 2007
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