S&P Institutes New YardstickFor Corporate Earnings

Saying current corporate earnings reports are about as clear as a "whodunit mystery," Standard & Poor's has decided to come up with its own measure of corporate profits.

The company announced it is instituting what it calls "core earnings," which it describes as after-tax earnings generated by a company's principal business or businesses.

Standard & Poor's officials say they began informal talks on the new measure a year ago, and that their efforts accelerated after investor confidence was jarred by the Enron collapse and subsequent reports of irregular accounting.

One of the problems, official say, is that current reporting methods lack uniformity and clarity. Reports are often a mix of operating, pro forma and reported earnings, each of which has subtle differences. And even though many corporations like to report operating earnings, they don't use uniform methods to reach their final figures.

Officials also acknowledged that the new measure probably would lead to lowered earnings on average, in terms of both historical data and earnings projections.

"Creativity is definitely on the rise, but reliability has definitely been lost," says David Blitzer, Standard & Poor's chief investment strategist. "Looking at this mix, we felt it was time to develop something that focused on a company's core business."

Kenneth Shea, Standard & Poor's global equity research director, who used the "whodunit" analogy in describing current reporting, says the new measure will make earnings reporting "consistent across companies and over time."

Among the main features of the core earnings measure is that it includes costs tied to employee stock options and pensions, as well as restructuring charges from ongoing operations. Among the items excluded are gains and losses from asset sales and goodwill impairment charges.

Blitzer says stock options reduced earnings 10% last year, yet were excluded from many corporate earnings reports. "We do think the information is vitally important and should be available to all investors and analysts," he adds.

The new measure will be used in all facets of Standard & Poor's analysis, including credit ratings, says Standard & Poor's President Leo O'Neill. It also will be applied to corporate historical data dating back to the mid-90s, company officials say.

Averitt Succeeds Greene At Raymond James Financial Services

Richard Averitt, executive vice president at Raymond James Financial Services (RJFS), has been named to succeed M. Anthony Greene, the firm's founder, as chairman and CEO.

The departure of Greene marks the end of his 27-year tenure at RJFS during which he is credited with building the independent brokerage firm from the ground up. RJFS has 4,604 financial advisors and accounts for more than half the revenues of the parent, Raymond James Financial (RJF).

"Tony crafted a strategy that combined the attraction of entrepreneurial business-building with the pervasive support of a major financial services firm to develop Raymond James Financial Services," says Thomas A. James, chairman and CEO of RJF.

A graduate of Duke University, Averitt joined the firm in 1978 and most recently served as executive vice president and national sales manager of the investment management division. Greene will remain for a transitional period expected to last several months. He will continue to serve as a consultant and a member of the RJF board. "One of my dreams was to build a staff that could operate the company as well, or better, without me," Greene says. "I also believe that dream has been achieved, and I leave in total comfort that the reins are in the best of hands."

Women Catching Up With Men On Investment Front

Women, it appears, are continuing to make their presence known in the world of investments. A recent study suggests they are growing more confident in their investment acumen, making smarter decisions and typically are investing less impulsively than men.

They are also more likely to call upon the assistance of financial advisors-with 37% saying advisors are their most important sources of investing advice.

"The investing landscape has changed dramatically," says Rob Densen, corporate affairs director of OppenheimerFunds, which commissioned the study as an update to one conducted in 1992. Harris Interactive conducted the telephone survey of 884 women and 401 men in March and April. The margin of error for the data gathered from women is plus or minus 3%, and for the men, plus or minus 4.9%.

"What were revelations 10 years ago-that investing isn't a 'man's job,' or that the vast majority of women will at some time be solely responsible for their finances-are common wisdom now. Women get it: They're responsible. The proverbial knight in shining armor fell off his mount sometime in the mid-90s."

The study, however, did find an area in which women still need to catch up: the pocketbook. The survey found that 51% of women respondents had total household assets, including retirement accounts, of less than $100,000-compared with 45% of men.

And only 14% of women have saved $100,000 or more for retirement, compared with 21% of men respondents.

This disparity exists despite the fact that 77% of women say they are more knowledgeable about investing than they were five years ago. And 79% consider themselves more knowledgeable about investing than their parents were at a similar age-up from 67% in 1992.

To back that up, 40% of women knew stocks were the best-performing asset class over the past 30 years, up from 31% in 1992.

"When it comes to the uphill climb to financial security, we can't confuse equal footing with preparedness-particularly given the sharper incline women face," says Densen. "Women live longer and earn less than men, and move in and out of the workforce. One thing that hasn't changed over the last 10 years is women's need to save more and invest earlier, longer and more diligently than men."

It is an area that could represent vast opportunities for financial advisors. Women, the survey finds, rely more on advisors and get more reliant as their wealth grows. The 37 % of women citing advisors as their most important source of financial advice contrasts with 26% of men who feel that way. Among women with $250,000 or more in assets, 47% considered advisors their most important investment resource.

The willingness of women to listen to advice may be one reason they are less likely to invest impulsively or get caught up in market frenzies. The survey, for example, found that while 51% of men have purchased stock on a tip from a friend, only 34% of women have done so. And 20% of surveyed women have lost at least half their investment in a tech stock during the past three years, compared with 29% of men.

"Women have a documented ability to stay focused on the long-term and to avoid short-term volatility," says Janet Wyse, OppenheimerFunds' manager of advocacy programs.

But advisors also should take note that many women feel advisors treat them with less respect than they do men.

Fifty-four percent of women and 43% of men say financial advisors do not treat women with the same respect they show men. That is slightly down from 57% of women in 1992. Yet 58% of women say the gender of their financial advisor does not matter, and 21% say they would prefer their advisor to be a man.

"Most people distrust Congress but like their own Representative. I think there's a little of that effect at work here," Wyse says. "That's not to say there aren't real issues. ... However unintentional, sometimes we act like we don't value (women's) business or understand their concerns."

Most Small Businesses Not Offering Retirement Plans

Small businesses are lagging far behind when it comes to providing retirement benefits-despite new tax incentives. A new survey finds 87% of small businesses without employee retirement plans are unaware of the new incentives.

Under the Economic Growth and Tax Relief and Reconciliation Act passed last year, businesses can take a tax credit for up to 50% of the costs of starting up and administering a retirement plan.

"When told of the new tax credit, 68% of nonsponsors said it would make it more attractive for them to offer a retirement plan," says Dallas Salisbury, president and CEO of the Employee Benefit Research Institute, which sponsored the study.

The study cited U.S. Labor Department statistics that show 64% of employees of medium and large businesses are covered by retirement plans, compared with only 34% of small business workers.

Among the reasons small businesses cited for not offering retirement plans were that they prefer to boost wages and other benefits and were too uncertain about revenues to commit to a plan.

Those small businesses that do offer retirement benefits cited the competitive advantage the plans bring in recruiting and retaining employees and the positive impact on employee morale.

There are indications small business retirement benefits are on the upswing. "Thirty-two percent of respondents from companies without a retirement plan say they are likely to start offering a plan in the next two years," says Mathew Greenwald, president of Mathew Greenwald & Associates, which conducted the study.

Despite Enron, Employees Still Investing In Company Stock

Enron or no Enron, employees like their company stock.

That's one of the conclusions one can make from a new survey by the Boston Research Group that shows only one in eight employees has decreased company stock holdings in his or her 401(k) account since Enron's collapse.

Furthermore, only 25% of survey respondents feel uncomfortable about their company stock as a result of what happened at Enron.

"These findings suggest that the Enron case has more value as a news story than as a practical lesson in diversification," says Boston Research President Warren Cormier. "Many participants are investing with their hearts and not their heads. In fact, more than half the participants agree that they invested in company stock to show loyalty to their company."

The nationwide telephone survey was conducted in mid-April and consisted of responses from 100 401(k) participants who have held company stock in their accounts before and after the breaking of the Enron story.

The survey, with a 9.8% margin of error, indicated that despite Enron, employees don't view their company's stock as risky.

The average respondent had 30% of his or her 401(k) assets in company stock, and 33% of participants had 50% or more of assets in company stock. While the concentrations would be considered high by financial advisors, 85% of survey respondents say they are "comfortable" with their allocations.

In fact, one third of the people questioned feel their company stock is no riskier, or even less risky, than a government bond fund. "Without doubt, many don't understand the relative risks of investing in one stock, despite years of employee education on diversification," Cormier says.

Fidelity, Schwab Raise Stakes As Competition Intensifies

As competition for advisors' custodial business intensifies, offerings from service providers like Schwab Institutional and Fidelity Institutional Brokerage Group are expanding. Last month, Schwab announced that it would build template Web sites for advisors who custody assets at the company.

Fidelity announced a broad array of new service offerings, including the renewal and expansion of a five-year agreement with Advent. According to Jay Lanigan, executive vice president and head of Fidelity's RIA services unit, the brokerage and custodial service provider is renewing its point-to-point agreement with Advent and initiating a new agreement for Advent's ACD product.

As part of this agreement, Fidelity has elected to become part of the AdventTrusted Network. "It's consistent with what we've heard from clients," Lanigan says. They want choice."

Lanigan also cautions that participation in ATN is contingent upon the "express written consent" of the client, not just the advisor or Advent. "When the underlying client approves, we will populate ATN with Fidelity's custodial data," he explains.