The New Newark
While I generally agreed with the content of your editorial, "When It Rains, It Pours," [Financial Advisor, October 2005] there was one comment that I felt needed a response. You mentioned that while America has shown its resilience after tragedies (like Hurricane Katrina) and has rebuilt, it doesn't always happen that way as "Cities like Newark and Detroit never recovered from the riots of the 1960s …" I cannot speak for Detroit, but I do believe that Newark, N.J., has recovered quite well from those days of rage in 1967. Class A office space has doubled in the last 20 years in the downtown area, and Class B space has seen a sharp drop in vacancy rates in the last ten years. Over 1,000 units of dormitory and other student-type housing are being built at this time for the five universities and professional schools that call Newark home. And private-sector residential construction is on a tear in every one of Newark's five wards.  
Newark still has all of the typical urban problems being experienced by America's cities. But I believe it is time to replace Newark as the poster child city that represents urban decay and failure. Unfortunately, it may be New Orleans' turn.

Peter J. Santana, J.D., Accredited Asset Management Specialist
A.G. Edwards & Sons Inc.
Short Hills, N.J.
Newark resident (1976-2005)

Clarification Needed
We want to clarify one fact about the Mutual Recovery Fund included in your article, "The Return Of Activist Investing" [Financial Advisor, January 2006].
The fifth paragraph states: "Depending on opportunities at any given time, distressed securities will account for 5% to 20% of the portfolio …" These percentages actually refer to the other six Mutual Series funds, not the Mutual Recovery Fund.
In the Mutual Recovery Fund to which the article refers, the allocation to distressed investments could be materially higher, depending on where we identify the most attractive opportunities to invest our shareholders‚ capital. Since the inception of the fund, the allocation has ranged from 30% to 70% of the fund's assets, and could conceivably be even higher under certain market conditions.

Mike Embler, CIO and portfolio manager
Mutual Recovery Fund
Mutual Series
Short Hills, N.J.

It Pays To Be Prudent
In "The Case Against Benchmarking" [Financial Advisor, August 2005], David J. Drucker argues that, "The vast majority of advisors reading this article are not required to even report performance to their clients, much less benchmark that performance." It is my understanding that an investment advisor (RIA) managing other people‚s money may be held to a fiduciary standard of care. That fiduciary standard of care is outlined in Prudent Investment Practices–A Handbook for Investment Fiduciaries, written by the Foundation for Fiduciary Studies. A fiduciary is required to monitor and supervise a client‚s portfolio. That includes the best practice 5.1, "Periodic reports compare investment performance against an appropriate index, peer group and IPS objectives." The 27 Prudent Investment Practices for Financial Advisors, Trustees and Plan Sponsors are further elaborated in The New Fiduciary Standard, by Tim Hatton, CFP, CIMA, AIF, published by Bloomberg Press. From a liability perspective, can an RIA afford to ignore these published prudent investment practices?

Alexander J. Cudzewicz, CPA/PFS
Registered Investment Advisor Representative
Oak Brook Asset Management
Scottsdale, Ariz.


Corrections
 The story "Declaration of Independence" in the January issue misspelled the name of Russell Gebhard of Sovereign Investment Group LLC in Houston.
Colleen Wood photographed Mike Embler for the story "The Return Of Activist Investing" in the January issue. The credit for the photograph was incorrect.